Renewable Energy in Panama: Legal Framework and Opportunities for Investors

María Paula Orsini, associate in Panama, expert in Regulatory Law, shares this article on how Panama has created an attractive legal framework to encourage investment in renewable energy. These laws offer tax incentives and benefits to diversify the country's energy matrix and promote a cleaner and more sustainable model.

Context
Energy is a fundamental service for the development of human life as we know it today. The constant search by humans to advance led to the discovery of what we now know as "renewable energies."

Renewable energies, or green energies, are those that come from natural resources and can renew themselves continuously. These are much more sustainable and cleaner energy sources than traditional ones, which come from fossil fuels, which are limited and have a negative impact on climate change.

The most prominent renewable energy sources include:

1. Solar Energy: This is obtained from the radiation of the sun in the form of light, heat, or ultraviolet rays. It can be captured using photovoltaic solar panels (which convert light into electricity) or solar thermal collectors (which convert sunlight heat into thermal energy).
2. Wind Energy: This comes from the force of the wind, harnessed through wind turbines that capture the kinetic energy of the wind.
3. Hydroelectric Energy: This is one of the oldest sources of renewable energy. It utilizes the flow of water, typically from rivers or dams, to move turbines that generate electricity.
4. Geothermal Energy: This type of energy is particularly useful in volcanic regions or areas with high seismic activity, and it involves harnessing the Earth's internal heat for electricity generation.
5. Biomass Energy: This energy generation method uses organic materials (such as wood, agricultural waste, or animal waste) to produce heat or electricity.
6. Ocean Energy: Also known as marine energy, this is derived from the movement and temperature of sea and ocean water. This type of energy can be harnessed in various ways:
   6.1 Tidal Energy: Uses the movement of tides to generate electricity.
   6.2 Wave Energy: Harnesses the power of ocean waves.
   6.3 Ocean Thermal Energy: Exploits the temperature difference between the surface and the ocean floor.
   6.4 Osmotic Energy: Takes advantage of the ionic exchange between freshwater and saline water at river mouths that flow into the sea.
   

Legal Framework and Investment Opportunities
Through various laws and regulations, Panama has created an attractive legal framework for companies and individuals interested in investing in renewable energies, offering incentives and benefits to those who choose to generate energy from renewable sources, such as solar, hydroelectric, and other clean alternatives.

• Law 37/2013

Establishes a regime of specific incentives for the promotion of solar energy, particularly for the construction, operation, and maintenance of solar power plants. This legislation was designed to promote the use of photovoltaic solar energy, an abundant and renewable resource in the country, and it plays a key role in diversifying Panama's energy matrix.

• Law 45/2004

Establishes a regime of incentives for the generation of hydroelectric energy and other new, renewable, and clean sources. This law has a broader focus, covering not only traditional energy sources such as hydroelectric power but also emerging technologies that contribute to sustainable energy generation.

• Law 42/2011

Establishes guidelines for the national policy on biofuels and electricity generation from biomass. This law allows the use of biogas as fuel and as an additive in combination with hydrocarbons or petroleum-derived products. It also authorizes the use of anhydrous bioethanol as an oxygenating additive in gasoline mixtures.

• Law 44/2011

Establishes the Incentive Regime for the Promotion of the Construction and Operation of Wind Power Plants intended for the public electricity service in the country. This legislation was designed to promote the development of wind energy projects as a renewable energy source within Panama's energy matrix.

This regulatory framework seeks to encourage investment in the establishment and operation of companies dedicated to the generation of renewable energies to reduce dependence on fossil fuels and promote a more sustainable and cleaner energy model.



The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.