Description

Honduras ranked 25th out of the 55 developing nations surveyed by Climatescope 2014, with a score of 1.15. It was also about midway through the pack (11th) among its 25 Latin American and Caribbean peers.

The Central American country relies on oil and diesel-fired power plants for more than half its electricity. Its power sector is in precarious condition: the state-run utility is financially weak, partly owing to the high rate of power loss in its transmission and distribution sectors.

Notwithstanding, in 2013, clean energy (excluding large hydro) represented 22% of the 1.8GW of grid-connected generating capacity. The country has introduced several incentives, including a price premium (with a special emphasis on solar) as well as tax breaks. The former is expected to drive most of the growth.

Since 2006, a total of $815m has been invested in clean energy, a significant sum given its relatively small $19bn economy.

Development banks are playing a key role, given the country’s high risk profile.

In 2014, Honduras approved a new electricity law aimed at increasing private participation in the power sector. If successfully implemented it should boost confidence among private developers and investors and will therefore foster greater clean energy deployment.