When Panama’s power system stretched to its limit, the way out wasn’t a single heroic measure but four coordinated decisions. This is what we did — and why it worked.

The problem: a grid at its limit

An energy crisis is rarely a single problem. It’s insufficient supply, inflexible demand, limited imports and spiking prices, all at once. Attacking only one of those fronts leaves the other three working against you.

Picture the power system as a highway at rush hour. If more traffic arrives than the road can carry, asking for patience isn’t enough: you add lanes, stagger the exits, open alternate routes and, when none of that is enough, make the toll reflect the real cost of driving at that hour.

That is exactly what we did with the grid.

Four decisions, one system

1. Add supply, fast and visible. We contracted diesel plants for six months, at a cost of USD 22 per kW-month. It wasn’t the elegant solution, but it was the honest one: firm, available capacity to hold the system while the rest was put in order.

2. Move demand, not just supply. For companies that already had backup diesel plants, we offered to pay their fuel cost plus a premium to disconnect from the grid during peak hours and self-supply. Every megawatt they stopped drawing was a megawatt less pressure on the system at the most expensive moment of the day.

3. Open an alternate route from the region. For the first time, fixed transmission rights were sold to secure roughly 40 MW of imports from Central America. The interconnection existed; what was missing was the mechanism to use it with certainty. We built it.

4. Let the price tell the truth. We removed the subsidies on electricity bills. It sounds counterintuitive, but the subsidy hid the real cost of energy and removed any incentive to consume carefully. By passing the true cost to users, each one decided on their own to save. The price signal quietly did the work no campaign could have.

The result

All four decisions pushed in the same direction: more supply, less peak-hour demand, more imports and an honest price. Together, they took the spot price of energy from USD 217/MWh to USD 67/MWh in about a year, and saved the State some USD 600 MM in subsidies over three years.

What the experience leaves us

None of these measures, on its own, would have solved the crisis. The diesel plant without demand management would only have added cost. Imports without an honest price signal would have been consumed without discipline. The judgment wasn’t in finding one brilliant idea, but in seeing the whole system and moving all four levers at once, in the right order.

That’s the difference between putting out a fire and ordering a system. And it’s how we still work: looking at the whole problem before proposing the solution.