The Evolution of Guatemala’s Energy Market: A Historical and Contemporary Perspective

This chapter provides a comprehensive analysis of the energy market in Guatemala, a small but fascinating country in Central America. Beginning with an overview of the end of the nineteenth century, the chapter documents the country’s early energy history, highlighting the first hydroelectric plant and the emergence of private negotiations in the energy sector. It then covers the role of the state generation company as a vertically integrated promoter of the electric market, the role of companies that created the utility, and their significant role in the country’s electrification and industrialization. In addition, it explores the turning point in the 1990s, when energy rationing caused private investment that ultimately led to the privatization of the market. Since then, Guatemala has been active in the energy industry, conducting three tenders that have attracted significant investment. It examines the participants of the electric market, analyzing and proposing improvements to problems detected. Finally, it studies Guatemala as part of the “Mercado Eléctrico Regional” (MER), which is one of the few integrated markets that has a great deal of activity in energy trading. The chapter provides valuable insights into the evolution of Guatemala’s energy market, demonstrating how the country has transitioned from a state-controlled system to a privatized and competitive one. The analysis sheds light on the challenges faced by the market, as well as the strategies and solutions implemented to overcome them. Overall, it contributes to the broader understanding of the energy sector in Central America and provides critical insights for policymakers, investors, and scholars interested in the region’s energy market.