With an almost limitless potential, the region is poised to become a major energy supplier for the technology industry. The rise of artificial intelligence (AI) across all areas of human activity has brought with it an unprecedented increase in energy consumption, setting new benchmarks for electricity production to meet the growing demand of the ever-expanding network of data centers that sustain this technology.
According to estimates from the International Energy Agency (IEA), data processing centers currently account for 2% of global electricity consumption—about 536 terawatt-hours (TWh)—a percentage that will continue to grow as AI applications expand into new areas of daily life and as consumers spend more time using AI-powered devices.
In fact, consulting firm Deloitte forecasts that by 2026, AI data centers will consume 90 TWh per year—approximately one-seventh of the total energy projected for global data center infrastructure, which by 2030 could reach between 1,000 and 1,300 TWh. This scenario highlights one of the most important opportunities for Central America, as the region’s renewable energy potential becomes crucial—especially given its leadership in renewable generation worldwide. The challenge now lies in developing the necessary infrastructure to become a reliable and preferred energy supplier for the generative AI industry.
Initial Steps
According to the Latin American Energy Organization (OLADE) global ranking of renewable electricity generation, among the 20 countries with the highest share of renewables in electricity production, seven are from Central America: Costa Rica (the only country, alongside Paraguay, producing 100% renewable energy), El Salvador (84%), Panama (84%), Belize (76%), Nicaragua (74%), and Guatemala (71%).
While hydropower remains the dominant source of electricity generation in all these nations, other renewable sources are gaining ground. Costa Rica stands out, with 24% of its generation derived from wind and geothermal sources—an approach now being replicated by neighboring countries.
The region has made important strides toward consolidating its energy industry, including initiatives such as the Electric Interconnection System of Central American Countries (SIEPAC), which links national power grids; the Regional Operating Entity (EOR), which manages and operates energy transactions across borders; and the Regional Electricity Market (MER), which facilitates the buying and selling of power. Additionally, the region aims to coordinate national expansion strategies within a unified regional framework.
“These initiatives lay the groundwork for clean energy supply contracts that ensure the reliability required by data centers and AI operations,” explains Cindy Arrivillaga, director of banking and finance at the Guatemala office of the multinational law firm Arias. These developments highlight one of the strongest opportunities for Central America—to strengthen its position as a trusted provider of clean, high-capacity energy to the global technology ecosystem.
Preparing the Ground
However, despite its undeniable potential, Central America still faces significant challenges that must be overcome to achieve the goal of becoming a major energy production hub capable of meeting the demands of generative AI.
Diego Gallegos, a partner at Arias – Costa Rica, believes the objective is achievable, but only as a medium- to long-term process. “It requires sustained investment in infrastructure, modernization of the regulatory framework, and political and social backing at every stage of transformation. Costa Rica already has the foundation thanks to its renewable energy tradition, but to meet global demands, it must continue expanding,” he says.
Building new wind, solar, and geothermal power plants; modernizing transmission networks to ensure stable and uninterrupted supply; and strengthening regional interconnections to expand energy exchange and backup capacity are all essential actions. These strategies reflect key opportunities for Central America, particularly in positioning itself as a renewable energy hub supporting AI infrastructure.
“If these interconnections are reinforced and exportable surpluses generated, the region could advance toward that goal—although it must always be complemented by firm energy sources that guarantee supply stability,” adds Missuly Clark, senior associate at Arias – Panama.
The Necessary Framework
A crucial aspect of consolidating Central America as a secure energy supplier to the technology industry is the establishment of a robust regulatory framework. Several countries in the region have already adapted their laws to cover all aspects—from generation to distribution and interconnection—ensuring stable energy transfers across borders.
Costa Rica, a global pioneer in renewable energy and a Central American leader in the technology industry, has developed a strong legal framework led by the Law Authorizing Autonomous or Parallel Electricity Generation, the Law on Rational Energy Use Regulation, and Law 10.086 on the Promotion and Regulation of Distributed Energy Resources from Renewable Sources.
“Despite this framework, there are still opportunities to enhance the country’s energy development. New legislation should promote investment through tax incentives, regulate energy storage integration, modernize the grid to support bidirectional flows, and, above all, simplify bureaucratic procedures,” notes Gallegos. His remarks highlight another area of opportunities for Central America—to strengthen legal and regulatory alignment to attract sustainable investment and technological infrastructure.
Panama, one of the first nations in the region to embrace renewable energy, enacted Law 45 (2004) to promote investment in new renewable sources (solar, wind, geothermal, and biomass) and Law 44 (2011) establishing a special regime for wind farms. However, Clark believes there are still areas for improvement, such as the need for specific regulations on energy storage and sustainable data center operations involving AI.
“The creation of a framework linking energy efficiency, green certification, and investment attraction in digital infrastructure will be essential for positioning the country in this new scenario. Likewise, regional integration for exporting surpluses must be reinforced through clear rules that facilitate Central American electricity trade,” she explains.
Honduras, which enacted the Law for the Promotion of Electricity Generation from Renewable Resources in 2007 and amended it in 2013 to attract renewable investments, strengthened the initiative further with the 2014 General Law of the Electricity Industry, eliminating the monopoly of the National Electric Power Company (ENEE). However, the reform was reversed in 2022 through Decree 46-2022, which redefined electricity service as a public good and matter of national security.
“In general terms, Honduras has a relatively comprehensive legal framework to regulate the energy sector. The challenge lies in ensuring that regulatory entities enforce these laws clearly, coherently, and realistically, based on the state’s capacity to guarantee power supply,” says Mario Agüero, partner at Arias – Honduras. His assessment underscores the ongoing opportunities for Central America to strengthen governance, legal certainty, and energy management systems to meet global AI power needs.
In summary, the combination of abundant renewable resources, advancing interconnection systems, and growing institutional experience presents significant opportunities for Central America to emerge as a critical clean energy provider for the world’s AI-driven economy—if it can overcome infrastructural, regulatory, and political challenges with a long-term vision and regional cooperation.