The policy of power and the power of policy: energy policy in Honduras

The rapid industrialization of Latin America in the post-World War II period that resulted in growing demand for energy in the region has led, at times, to various supply constraints resulting in excess demand. In Central America the absence of known depletable energy resources allied to a shortage of foreign exchange has ensured an almost exclusive dependency upon hydropower sources for electricity generation. In the case of Honduras, the reliance on hydro proved costly. Environmental degradation resulted in serious energy shortages in 1994/5 with electricity being rationed for up to 12 hours each day. As a direct consequence, gross domestic product growth declined, the import bill rose due to the switch to alternative fossil fuel sources, and air pollution increased because of increased generator usage. This paper traces the evolution of energy supply and demand in Honduras, showing why the crisis of the 1990s emerged. It then forecasts future energy demand and examines the way this demand might be met.