May 2025 Vol. 80 No. 5
Features
Underground construction activities grow in Central America, Caribbean
Eugene Gerden, Contributing Editor
The volume of underground construction activities in the Central America and Caribbean region will significantly accelerate due to an acute need of modernization of local energy infrastructure. Also, the need for solutions to frequent regional blackouts and energy shortages is driving work.
As many Caribbean nations and Central American states are located in areas of high risks of hurricanes and tornados, the development of reliable energy infrastructure has always been considered a priority by a majority of local governments. Still, financial resources allocated by local authorities for development of underground infrastructure has been insufficient to maintain the system. This has resulted in several cases of major energy blackouts taking place in multiple countries, due to impacts of both natural disasters and outdated infrastructure.
In order to ensure stable electricity supply throughout the Central American region, several nations have announced plans for strengthening and expanding the existing Central American Electrical Interconnection System (SIEPAC). The US$500-million system was built in 2013 and consists of 1,114 miles (1,793 km) of transmission lines from Guatemala to Panama.
According to earlier statements by René González, director of Regional Operations Entity (EPR), SIEPAC’s operators in Central America must invest more than US$250 million in its electricity market and the development of its transmission and distribution infrastructure already. Of these, the largest investments required are in Honduras, followed by Costa Rica. During 2023 and partly in 2024, Honduras was most affected by the electricity deficit with blackouts of up to six hours in different provinces of the country.
In general, EPR aims to exceed the minimum transmission capacity of 300 megawatts (MW) among regional countries during the next decade. Part of the plan is to increase the regional transmission capacity in the medium term of 450 to 550 MW, which will ensure a potential energy exchange of 10,000 gigawatt-hours annually. The project involves building at least 29 transmission projects in the Central American region during the period 2024-2033 and expansion of the regional network to reach a transmission capacity of 550 MW by 2028.
René González commented, “By making all these investments in transmission and also making all the investments in generation, no deficit is expected.”
El Niño problems
In addition to Honduras, according to regional analysts, the increase of transmission capacity also has a strategic importance to Guatemala. The country became vulnerable to the effects of the El Niño phenomenon (which led to lack of rains in the country). Panama suffered similar issues which, according to experts of EOR, is emerging in the medium and long term as the largest exporter of energy in the electrical interconnection system of the region.
In the meantime, other regional states have plans for development of their transmission and distribution infrastructure. One such country is Jamaica, where frequent hurricanes led to serious damage of local public infrastructure, including energy infrastructure.
After a negative impact on Jamaica by Hurricane Beryl in July 2024, many representatives of the local public increased their pressure on local authorities to convince it to strengthen the energy network of the Island in order to avoid such negative consequences. According to data of the local transmitting monopoly Jamaica Public Service Company (JPS), around 65 percent of its customers were without electricity.
Local analysts believe much damage can be avoided if transmission lines are run underground. At present, a significant part of Jamaica’s electricity network accounts for overhead electricity cables, which are susceptible to damage and collapse during storms.
In fact, the idea of the complete switch of Jamaica to underground electricity infrastructure was first put forward by then Prime Minister Edward Seaga, in the aftermath of Hurricane Gilbert in 1988. That storm caused 80 per cent of Jamaica’s houses to lose their roofs, and it cost Jamaica 90 percent of its GDP. According to Jamaica Gleaner business paper, a significant portion of the island was without electricity for months while line crews from Florida helped with the restoration efforts.
In the meantime, Cuba may also consider more active building of underground electricity infrastructure in years to come, as the country’s energy situation has deteriorated considerably in recent years. Conditions reached a critical point last October with deficits of 1,275 megawatts (MW) and power outages in much of the country. At present, about 60 percent of the electricity generated in the country comes from outdated thermal power plants, where technical maintenance is seriously complicated due to lack of spare parts.
According to recent statements made by Cuba’s Minister of Energy and Mines Vicente de la O Levy, "a group of actions to be undertaken" are planned to solve the problem of electricity shortage in the country. Local analysts say that may involve more active development of the transmission and distribution network of the country to avoid further total blackouts.
Water infrastructure
As in the case of electricity, the development of water infrastructure has become a priority for the authorities of most Central American nations and Caribbean states. This is also reflected by serious investments, which have been allocated for these needs by many regional states in recent years.
For example, in Guatemala, the government of President Alejandro Giammattei, invested US$900 million between 2020 and May 2023 in more than 4,400 projects that involve building new water and wastewater infrastructure in the country. For the current year, Guatemalan government together with the national Congress, approved a US$2.3-billion budget for infrastructure projects. Of these, a significant part will be allocated for the further expansion of water infrastructure of the country.
Panama’s capital Panama City has faced a serious water crisis that required urgent actions from the local authorities and Panama central government. In January 2024, the authorities approved investments of about $30 million in the modernization of the city’s water network. Most of the funds will be allocated in the building of Eastern and Northern Hydraulic.
This initiative is expected to be just the beginning while, according to Antonio Manuel González, executive secretary of National Council for Sustainable Development (Conades), and one of the state agencies responsible for the development of water network in Panama. The funds will also be allocated to water and sewer projects in other parts of the country.
Of the island Caribbean states, probably the most ambitious plans in its water sector have been recently announced by the government of Dominican Republic, which plans to invest US$8.85 billion over 15 years to improve domestic water infrastructure.
In fact, the Dominican Republic suffers from water stress and chronic water shortages, despite its enormous water potential with annual rainfall exceeding 55 inches. The country's water development is very poor, as 65 percent of rainwater is lost to the sea. With 36 official dams, only 9 percent are in good condition. Although the water from treatment plants is drinkable, sewage and storage problems ultimately make it unfit for human consumption. In addition, only 10 percent of wastewater is collected by sewage systems and less than 20 percent receives any kind of treatment.
As part of state plans, the improvement of the water distribution network of the country will be conducted in years to come. It is expected the improvement of the country’s water network will primarily involve building new water infrastructure, which should take place with the attraction of foreign investors, particularly those from Spain.
Development of gas pipelines’ infrastructure
As the demand for natural gas in Central America and the Caribbean remains strong, that contributes to the growth of investment activities in the pipeline sector of the region.
One of the biggest investment projects is the Mexico-Northern Central America Gas Pipeline, a proposed natural gas pipeline that would transport gas from southeastern Mexico to Guatemala, El Salvador and Honduras. The new pipeline is expected to be 373 miles and is scheduled to be launched in 2029.
Its successful implementation will contribute to industrial development of three Central American nations and reduction of their energy costs. Still, according to them, implementation of the project could be delayed due to complex terrain, including mountains, coasts, sierras and rivers. Another problem is local populations and communities, which may oppose building of the pipeline on their territories.
There is some potential for the implementation of large-scale gas pipeline projects with the participation of Venezuela. The local Petróleos de Venezuela is considering prospects for building a gas pipeline from the Venezuela state of Falcón to Curacao, which is the constituent island country in the southern Caribbean Sea, as well as Columbia, thanks to the recent discovery of gas reserves in the Colombian Caribbean on the basis of Sirius. This is the most important gas discovery ever made in Colombia with proven reserves of 2.3 trillion cubic feet.
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