Panama enacts regulations and tax credits for solar energy production

Panama has currently a number of regulations in force in order to offer tax incentives 

for the construction, operation and maintenance of solar power stations or installations.   The main one is Ley 37 of 2013, which sets out the tax incentive guidelines which aim to promote the construction, management, and maintenance of solar energy systems in Panama.  The tax incentives include:

• A tax exemption on customs duties on equipment, machinery, and other materials necessary to construct and maintain solar panel systems
• An income tax credit of up to 5% of the total direct investment in a solar panel system, as well as works on the plants and/or facilities that are converted into public use infrastructure (roads, ways, bridges, schools, health centers and others of similar nature)
• Accelerated depreciation for the equipment used to generate solar power

Equipment, parts and systems which are exempt from customs duties are:

1. Solar water heaters or heat producing equipment;

2. Parts and components necessary to assemble the solar collectors to heat water and/or solar drying equipment;

3. Solar panels and individual solar cells;

4. Long-term stationary accumulators

5. Inverters and/or solar inverters; and

6. Other accessories, equipment, software and items which are destined to the use and/or development of solar energy.

The Authority of Public Services (ASEP) of Panama has issued an April 2014 regulation for public procurement of solar energy generation. The "Rules for energy trading through acts of exclusive competition for solar generation plants", set the parameters for future tenders for photovoltaic projects.

The regulation provides that tenders approved solar projects are coordinated by the state-owned enterprise Empresa de Transmision Eléctrica (Etesa) which also sets a reference price. During the tender process, will be awarded projects at prices at or below the reference price . Another regulation was issued for contracts for sale of electricity within closed contests subject to a maximum term of 20 years. The regulation also requires that the tender documentation include clauses to discourage and punish corrupt practices and fraud.

The text of the regulations were subject to public consultation by the Autoridad de Servicios Publicos (ASEP) regulator over recent months. In the query, Asep received comments from about five companies. Late last year, Asep also submitted to public consultation a technical regulation for connecting photovoltaic installations and a Code of Photovoltaic Networks.

At present, there are a number of solar projects planned in the country. In the last year ASEP has granted temporary or permanent license to about a dozen solar projects with a combined capacity of 200 megawatts. The largest solar plant in the country, Central Sarigua, was opened earlier this year with 2.4 megawatts of power.