Caribbean & Central America - April 2025

On 1 March the power went out throughout Honduras, the latest sign of ongoing fragility in the electricity system despite government promises to overhaul the energy sector.

Honduras’ state electricity company Empresa Nacional de Energía Eléctrica (ENEE) said that 100% of electricity supply was restored by 3 March, and published a statement blaming the blackout on “a transitory and atypical failure in the connection between Honduras and Nicaragua.” It added that the fault had occurred on a transmission line connecting a substation in Honduras’ Choluteca department with one in the Nicaraguan department of León. 

ENEE noted that just 23km of the 98km long transmission line lies in Honduran territory, but also highlighted that the national grid (SIN) has faced a “structural problem due to a lack of investment in transmission over the last 15 years.” It went on to blame “public-private corruption” for the shortfall of transmission infrastructure in recent years, although it also claimed that a L21bn (USR$821m) investment plan announced in 2022 would help to address this and improve the stability of the electricity system.

There has been some recent progress, including the completion of the San Pedro Sula Sur - San Buenaventura transmission line. The 46km line cost L1.1bn and will link with other lines on the north coast, the east of the country and with Guatemala, said ENEE in a statement published 26 March. It will add capacity, improve resilience to faults and reduce dependence on thermal generation plants by prioritising renewable energy, added ENEE. 

The company also announced that a 15MW generation plant had entered service in El Progreso municipality, Yoro department, on 17 March, as well as the start of a project to expand the electricity substation in Siguatepeque municipality, Comayagua department, on the same day. In a statement, ENEE said that “the aggressive investment of President Xiomara Castro’s government in the electricity sector is historic and is worth more than L23bn with the execution of more than 51 generation, transmission and distribution projects.”

Looking ahead, ENEE is also working on a battery storage project at the Amarateca substation in the Valle de Amarateca district, Francisco Morazán department, which will boost transmission capacity and reduce the frequency of powercuts. The “pioneering” project will cost L1.3bn and become the largest energy storage project in Central America, according to ENEE. Despite these investments, the electricity sector faces serious issues. The country is struggling to satisfy a growing demand for electricity as little generating capacity has been added to the system in recent years, and it is highly reliant on hydroelectric plants whose operations have been impacted by recurrent periods of drought. 

Significant investment is still required in both transmission and distribution infrastructure, but spending is disincentivised by the nature of the interconnected Central American power system, which means that even if one country invests heavily in its own network, blackouts can still be caused by faults in other countries. Castro promised to overhaul the sector at the beginning of her term which began in January 2022, but progress has been limited. Energy security will be a key electoral issue in the run up to the general elections scheduled for November, and the president will likely continue to trumpet investment in energy projects in the coming months. Nonetheless, fixing longstanding issues will require legislative reforms as well as significant funding.