Energy self-consumption, the new investment model in Honduras?

Interesting changes are taking place in the Honduran market, thanks to technological advances in the electric power sector, where consumers and commercial/industrial companies can install self-consumption electrical energy systems in order to reduce usage, protect the environment and especially to reduce the amount of the electric bill. This practice is being implemented by entry into force of Decree number 404-2013, of the General Law of the Electricity Industry “LGIE”, which is the new regulatory base of electric power in Honduras. The creation of the Law was stimulated by the modernization of the energy sector in the region and is based on the goals of efficiency and competition in the generation of electric power, according to the following procedures:

1. Regulate and open a new market in Honduras in the generation, transmission, distribution, and commercialization of electric power.
2. Create import or export activities and local consumption of electricity.
3. To adapt the internal regulation of the country to the level of the region in relation to the electrical systems.
4. Expand the electric subsector market, so that the activities regulated by it can be carried out not only by the public sector but also by private or mixed investments established as mercantile companies that comply with the requirements of law, allowing in cases where renewable energy sources are used, the concession for the use of the non-water renewable resource and environmental license shall have a duration equal to the useful life of the project.
5. The operation of the national electricity system includes the relationship that exists with related systems with neighboring countries, that is, with the regional Central American electricity market.
6. The Law changes the regulatory structure of the electricity sector, creating the Electric Power Regulatory Commission “CREE”.

The LGIE establishes a new structure, organization and operation of the electrical system where the CREE becomes a fundamental pillar as the regulator of the sector, being a decentralized entity that has functional, budgetary and administrative independence sufficient to ensure the technical and financial skill necessary for the fulfillment of its objectives and having as main functions the following:

1. Apply and supervise compliance with the legal and regulatory norms that govern the activity of the electric subsector, for which the proper authority may carry out the inspections it deems necessary in order to confirm the veracity of the information that the companies within the sector or consumers have supplied.
2. Apply the sanctions that correspond to the companies and users regulated by the LGIE in case of infractions.
3. Issue the regulations necessary for the best application of the LGIE and the proper functioning of the electric subsector.
4. Grant operating licenses for transmission and distribution.
5. Define the methodology for calculating transmission and distribution rates, monitor their application, approve, disseminate and enforce the resulting rates, as applicable.
6. Establish the update rate, the unit cost of the energy not supplied, and the time blocks to be used in the calculation of rates.
7. Approve the bidding rules, supervise the power and energy purchase processes by the distribution companies and approve the power and energy purchase contracts that result from said processes.
8. Approve the method by which distribution companies calculate the volume of energy to invoice monthly for public lighting, among others.

The Law also establishes other participants such as:

• Power Generators
• System Operator
• Energy Transmission
• Electric Power Distribution
• Qualified Consumers
• Marketers

Based on what is indicated in the LGIE, to expand the market of the electricity subsector with private or mixed investments for the use of renewable energy sources such as self-consumption, which is the individual production of electricity for own consumption, investments in photovoltaic systems (solar panels), would be increasingly common in Honduras. This change has the purpose of grouping actions that are taken both on the side of supply and demand, without sacrificing welfare or production, allowing to improve the security of supply. Achieving, in addition, savings both in energy consumption and in the economy of the population in general. Simultaneously, greenhouse gas emissions are reduced and improvements in the finances of energy companies are achieved. We consider that there are advantages for the State of Honduras with the implementation of photovoltaic systems oriented to self-consumption such as:

• A decrease in the peak daily power demand.
• Reduction of losses due to transmission and distribution.
• Change of the energy matrix.
• Reduction of currency output.
• Promotion of investment at the level of the entire population.
• Greater velocity in monetary turnover within the country.

There are also advantages for private companies such as:

• Savings in the expenditure on electric power.
• Greater competitiveness.
• Environmental Protection.
• Image of corporate social responsibility.
• Better budgetary management of energy expenditure.

For the population:

• Savings in energy expenditure.
• Investment in other needs.
• Environmental Protection.
• High costs of initial investment and maintenance.
• There is no current regulation that regulates self-consumption in Honduras.
• Dependence on consuming electricity from the distributor.

We hope that more investments in photovoltaic self-consumption will ensue as it will help us to be more energy efficient and contribute to the environment, which Honduras strives so much to protect.