Panama’s solar energy chamber is urging the government to eliminate a national cap on distributed solar generation. The call comes as the country prepares to draft a new National Energy Plan in January 2026. Industry leaders argue that removing the 4 percent limit is essential for accelerating Panama’s energy transition and meeting growing consumer demand.
New data reveals significant growth in the sector over the past eleven months. More than 40 megawatts of new solar capacity were added through self-consumption systems between January and November 2025. This brings Panama’s total installed self-consumption capacity to 188.8 megawatts, spread across nearly 7,000 active users. The majority of these systems are concentrated in the districts of Panama, San Miguelito, Arraiján, Chitré, and Santiago.
Juan Andrés Navarro, President of the Panamanian Chamber of Solar Energy (CAPES), leads the push for regulatory change. He represents an association of more than 100 companies. Navarro contends that arbitrary percentage limits hinder progress and that technical solutions exist for grid management.
“In my opinion, any cap on the installation of self-consumption systems must be eliminated,” Navarro stated. [Translated from Spanish] “I believe there are other regulatory mechanisms for the distributors and the National Authority of Public Services to conduct technical inspections at points where a maximum is being reached. This is to determine the necessary investments to increase grid capacity, and not to view it as a total percentage of the country, as is currently the case.”
The chamber’s proposal arrives just weeks before the National Energy Secretariat begins formal discussions on the country’s energy future. Officials confirmed that solar power will feature prominently in the upcoming plan. This includes both small-scale distributed generation and larger utility-scale plants.
Rapid Growth Meets Regulatory Ceiling
Panama’s solar user base expanded by 35 percent from late 2024 to November 2025. Over 1,800 new residential and commercial customers adopted solar panels during this period. Most customers fall under the BTS (Low Simple Tension) tariff regime, designed for homes and small businesses with demands of 15 kilowatts or less.
A smaller but significant group operates under the MTD (Medium Double Tension) scheme. This category serves larger industries and commercial users. The current 4 percent national cap applies to the total distributed generation capacity allowed on the national grid. Industry advocates argue this blanket restriction is now outdated.
They propose a shift toward localized grid studies instead. Under this model, utility companies would assess capacity at specific connection points. Investments would then follow to reinforce the network where needed, allowing for unlimited overall growth. Data from CAPES indicates the existing solar systems already provide substantial environmental benefits. They prevent over 163,000 tons of CO₂ emissions annually, an impact equivalent to removing 35,500 vehicles from circulation.
Fiscal Incentives and Future Plans
Alongside removing the generation cap, CAPES is advocating for broader tax exemptions. Current law, specifically Law 417 of 2023, exonerates solar panels from import duties, tariffs, and the Selective Consumption Tax (ISC). The chamber wants this list of exempted equipment expanded to include other essential components like inverters and batteries, which are currently taxed.
Navarro emphasized the need to keep the exemption list updated with advancing technology. The National Energy Secretariat (Panama) has been active on this front. Secretary Rodrigo Rodríguez reported that his entity approved 570 tax exemption certifications this year alone. These approvals represented a fiscal sacrifice of nearly three million dollars, aimed at making equipment more affordable.
“We are working on defining the equipment that is susceptible to exemptions,” Secretary Rodríguez confirmed. [Translated from Spanish] “We have a working group that we want to make permanent, because technology changes rapidly. The goal is to prevent difficulties when new technologies enter the market.”
Rodríguez also outlined the government’s broader solar strategy. He revealed that three out of four renewable energy tenders planned for the short and medium term will focus on promoting solar generation. The objective is to diversify Panama’s energy matrix significantly. The formal process for crafting the new National Energy Plan will commence in January with direct input from private sector groups, including CAPES.
Economic and Environmental Impacts
The push for solar is framed as both an environmental imperative and an economic strategy. CAPES projects that distributed generation could reduce CO₂ emissions by 3.8 million tons between 2021 and 2030. This transition also promises to decrease state subsidies for electricity over time. It enhances the financial sustainability of the national energy system.
Every solar installation represents tangible savings for a family or a business. Navarro highlighted this cumulative effect. He connected individual actions to national goals, painting a picture of a more competitive and sustainable economy. The growth is not confined to the capital. Provinces like Herrera, Coclé, and Veraguas are also seeing significant concentrations of solar customers.
The coming months will be critical for Panama’s energy policy. The dialogue starting in January will set the course for how quickly the country can embrace its solar potential. Industry leaders are positioning the removal of the 4 percent cap as the single most effective step to unlock that future. They believe technical grid management, not arbitrary limits, should guide the nation’s progress toward a cleaner energy landscape.