• The production of energy is free and does not require authoriation or any previous condition given by the State, other than the ones that are recognized by the Political Constitution of the Republic of Guatemala and the laws of the country. Nevertheless, to use with those ends any public domain, an authorization granted by the Ministry will be needed, whenever the potency of the central exceeds 5MW. 
• The transportation of electricity is free, when it does not need to use public domain.
  
• The transportation of electricity that implies the use of public domain and the service of final distribution of electricity will need authorization. 
• The prices for the granting of the electricity service, with the exception of the services of transportation and distribution, are subjected to authorization. The transfer of energy between generators, traffickers, importers and exporters that result from the operation of the retail market, will be subjected to authorization under the terms of the Law.

The legal structure that with the General Law of electricity promote the interaction of the agents, is:

• Political Constitution of the Republic of Guatemala
• General Law of Electricity, Decree No. 93-96
• Regulation of the General Law of Electricity, Government Ordinance No. 256-97 and its reforms
• Regulation of the Administrator of the Retail Market, Government Ordinance No. 299-98 and its reforms
• Norms of Operative and Commercial Coordination of the Administrator of the Retail Market
• Law of Incentives for the Development of Renewable Energy Projects

ELECTRIC ENERGY MARKET

The Electric Energy Market is formed by the Regulated Market and the Retail Market. The Regulated Market is integrated as follows:

• Demand: all users that demand potency less than 100kW
• Supply: authorized distributors within the coverage zone

The Retail Market has the following characteristics:

• Generators with potency more than 5MW
• Distributors that have more than 15.000 users
• Transporters that have a minimum capacity to carry 10 MW
• Traffickers that buy or sell energy blocks associated to a firm offer of at least 2 MW
• Great users with maximum demand of potency over 100 kW

The operations of purchase and selling of the Retail Market are done under the Norms of Commercial Coordination, through:

• The Spot Market
  
• The Term Market: the Great Users agree on the terms, quantities and prices of energy
• The Market of Transactions of Deviations of Daily and Monthly Potencies

Guatemala's electrical system consists of three components: generation – power supply, transportation, and distribution - energy demand.

The generation system consists of: hydroelectric plants, steam turbines, gas turbines, internal combustion engines and geothermal plants. Generation activity is not subject to authorization by the Ministry of Energy and Mines, except those who make use of public property.

Transit System consists of the Main System and Secondary System. Main System being shared by the generators and interconnections to other countries, and operating primarily in three voltage levels: 230. 138 and 69 kV. The secondary system is the means of interconnection of a generator to the mains.

The Distribution System consists of the distribution infrastructure - lines, substations and distribution networks - which operates at voltages below 34.5 kV. The main distribution companies, coordinated by the Wholesale Market Association are:

•      Empresa Electrica de Guatemala: serves the central area of the country.
•      Distribuidora de Electricidad de Occidente: serves the western departments.
•      Distribuidora de Electricidad de Oriente: serves the eastern departments.
•      Municipal Utilities.

The dynamism of the market shows that the transactions of energy in 2010 was 8.276,21 GWh, that 9.913,91 GWh of them were generated locally and 362,30 GWh were imported from the Regional Electric Market and from the interconnection with Mexico. 45,5% of the energy was hydraulic; 22,5% reciprocated engines; 12,6% from vapor turbines; 11,8% from co-generators (also vapor turbines); 3,1% were geothermic; 0,01% from gas turbines and 4,4% imports. The local use of energy, including the proper uses reported from units, central generators, and equipment of electric energy transportation, reached 7.847,89 GWh, with 3,29% growth compared to last year. The losses in the Principal and Secondary transmission systems were 289,39 GWh, which represents 3,5% of the total generation. 

The exportation of energy to the Regional Energy Market (REM) was 131,57 GWh, therefore the country reached 34,5% of participation in the injections of energy in the REM, representing 1,59% of the country's total generation. Energy imports from the Interconnection with the System of Mexico was 348,68 GWh, which represents 4,21% of the country's total generation. 

Hopefully, 2011 will have 6,5% growth in the market, which implies a symptom of economic recovery after the world crisis. 

ELECTRICITY GENERATION POTENCY

Guatemala is a country where several projects can be developed: hydroelectric, geothermic, biomass generation, Eolic and solar farms, among others. Nowdays, the tendency of the electric market strongly leans to the use of our renewable resources, our matrix is turning on that way. The Ministry of Energy and Mines is evaluating our potential, with other entities of the sector, the results are shown below:

 

Source: Ministry of Energy and Mines 

ELECTRIC INFRASTRUCTURE 

At present, as part of the dynamism of the sub-sector, and following the Indicative Expansion Plan Generation System and the Plan of Expansion of the Transportation System 2008-2018, five rings of transportation are being built along all the country. This ringed topology is developed so that the system is followed and accomplished with all the conditions of operative security, which guarantees that if there is any damage in an element of the network, it could still work normally. The Project was contracted through a public international bit, won by the company Energy Transportation of Central America (TRECSA). The Project consists int the construcion of 853 km of tranmission lines in a 230 kv capacity. It will cost around US$ 400 million. Until November 2011, TRECSA has completed 32% of the construction, wich infers that it will be totally completed by 2012, as planned. 

INVESTMENT OPPORTUNITIES 

At present, the bid PEG-1-2010 is open. This contest is based on the Guatemalan regulatory measure that establishes that the electricity distribution companies must contract its requirements of potency and electric energy through open bids that add new generation centers to the National Interconneted System, to guarantee the supply to the final users in a long term, in an efficient way at competitive prices. In this sense, on August 3rd, 2010 and in January 28th, 2011, through the Resolutions CNEE-185-2010 and CNEE-37-2011, respectively, the National Commission of Electric Energy approved the Reference Terms of the open bid PEG-1-2010, which contain the conditions that will allow companies of distribution - Electric Company of Guatemala (EEGSA), Western Electricity Distributor (DEOCSA) and Eastern Electricity (DEORSA) - reach the necessary economic efficiency for the contract of its requirements of potency and electric energy in a long term, that will supply final users of the electric energy service. 

The open bid PEG-1-2010, has as its main objective to contract up to 800MW of potency, for a 15-year term since 2015. This contract will be adjudicated to the group that results in the minimum cost of supplies for the users of the distributors.

The bid also has the purpose of supporting the change of the energy-electric matrix, for one that has quotas for projects that use renewable energy and non-renewable energy.

January 26thh, 2012, is the date for the presentation of the offers, the bases can be acquired at National Comission of Electric Energy - CNEE - or at the Electric Company of Guatemala.