Energy Inequalities in Central America: Challenges and Policy Responses

Energy poverty remains a critical challenge in Central America, where significant disparities in access to modern energy services persist. These disparities are closely linked to income inequality and are more pronounced in rural areas than in urban centers. In 2014, Guatemala had the highest level of unequal access to electricity across all income levels, while Costa Rica had the best access. Despite improvements in countries such as Panama, Costa Rica, and El Salvador between 2016 and 2022, many households, particularly in economically disadvantaged regions, still rely on low-quality energy sources such as firewood and charcoal for cooking. Indigenous populations in Guatemala, Nicaragua, and Panama face severe ethnic segregation in access to electricity, although access among these communities is gradually increasing. This chapter explores the multifaceted issue of energy poverty in Central America, examining its social, economic, and geographic dimensions. It highlights key challenges, including limited electricity infrastructure, high energy costs, political instability, and climate vulnerability. It also discusses potential solutions and initiatives, such as the development of renewable energy, the implementation of energy efficiency measures, policy and regulatory reforms, and improved access to financing. It also reviews government efforts to promote an integrated energy policy agenda focused on renewable energy, energy transition and energy security. These challenges can be addressed through comprehensive and sustainable strategies, the region can work towards equitable access to modern energy services for all its inhabitants.