IDB Advances Central America’s SIEPAC Integration to Power Vision 2050

The Inter-American Development Bank (IDB) convened a high-level meeting at its headquarters in Washington, D.C., bringing together energy ministers from six Central American countries, along with regional authorities, multilateral partners, and private sector representatives to chart the next phase of the Central American Electrical Interconnection System (SIEPAC). The initiative, a centerpiece of the IDB’s América en el Centro regional program, is central to achieving energy security, economic competitiveness, and sustainability across the region.

Strengthening Regional Integration Through SIEPAC

The session focused on the promotion of the Third SIEPAC Protocol, a critical framework aimed at:

• Modernizing regional governance of the electricity sector.

• Strengthening legal certainty for investors.

• Attracting greater private sector participation.

• Preparing Central America’s power system to meet the challenges of the energy transition and the region’s Vision 2050 development strategy.

The discussions built on over a decade of achievements by the Regional Electricity Market (MER) and the regional transmission infrastructure that underpins it.

Achievements to Date

Since its inception, SIEPAC has become a landmark project for energy integration in Latin America. In 2024 alone, MER traded more than 3,700 GWh of electricity, valued at approximately US$350 million, with the participation of over 300 private agents. This has:

• Reduced electricity costs.

• Enhanced energy security.

• Provided a platform for new investment.

“SIEPAC has demonstrated that regional cooperation can transform strategic sectors,” said IDB Executive Vice President Jordan Schwartz. “Thanks to this shared vision, Central America has reduced costs, increased energy security, and opened space for new investments. Now we must take the next step: complete the second circuit, update regulation, and open the door to even greater integration.”

Toward Greater Connectivity and Innovation

The meeting also underscored the need to expand integration beyond Central America, with potential interconnections to Mexico, Colombia, and Belize, creating a larger and more competitive energy corridor.

Additionally, participants highlighted the importance of embracing new technologies:

• Energy storage solutions to balance supply and demand.

• Smart grids for efficiency and reliability.

• Digital platforms to manage growing shares of renewable energy.

These innovations are critical as Central America increases reliance on solar, wind, hydro, and geothermal resources to meet climate commitments and diversify its energy mix.

Vision 2050: A Sustainable Energy Hub

Looking ahead, the IDB and its partners reaffirmed their Vision 2050 for Central America:

• A region consolidated as a competitive and sustainable energy hub.

• Guaranteed energy security for all citizens.

• Increased ability to attract global investment.

• Expanded capacity to export clean, renewable energy to neighboring countries.

“The IDB reaffirms its commitment to continue being a strategic partner for Central America and the region, supporting regulatory modernization, infrastructure financing, and technological innovation,” said Marcelino Madrigal, Head of the IDB’s Energy Division. “These are essential steps toward a more secure, efficient, and sustainable electricity system.”

The Road Ahead

With the Third SIEPAC Protocol on the horizon, Central America is entering a new stage in its regional energy journey. Completing the second circuit of the SIEPAC transmission line, updating regulations, and enhancing governance will be crucial for the region to harness its full potential.

As the region faces growing electricity demand and the global imperative for a green transition, SIEPAC is poised to serve not just as an interconnection project, but as the backbone of Central America’s long-term energy resilience, competitiveness, and sustainability.