Panama has always had an enormous natural advantage when it comes to solar power.
It is a tropical country sitting relatively close to the equator, with abundant sunlight throughout the year. Yet for decades, solar energy remained something of a niche technology: a few panels on rooftops, remote systems for places far from the electrical grid, and small installations that seemed almost experimental.
That is changing rapidly.
Solar power is no longer just something you put on the roof of an isolated house in the jungle. Panama is increasingly building large-scale solar farms capable of supplying electricity to thousands of homes and businesses.
By the end of 2024, Panama had reached approximately 695.6 megawatts of installed photovoltaic capacity, representing about 13.8% of the country's total installed generation capacity. Even more strikingly, Panama added about 143.4 MW of new solar capacity during 2024 alone. Solar photovoltaic generation supplied approximately 7.8% of the country's electricity production that year.
And the growth isn't slowing down.
Why is solar suddenly becoming so popular in Panama?
The answer is actually quite simple.
The sun is already here.
Every day, enormous amounts of energy arrive from the sun and hit Panama's land surface. Solar panels simply convert a fraction of that sunlight directly into electricity.
And unlike a hydroelectric dam, a solar farm doesn't require a river to be dammed. Unlike a thermal power plant, it doesn't need to continuously burn fuel to produce electricity. There are no rotating turbines at the panel itself, no smokestack and no fuel tanker delivering the basic energy source.
The technology has also become dramatically cheaper and more efficient over the past several decades.
That combination, abundant sunlight + falling technology costs + growing electricity demand + investors looking for renewable projects—has created a powerful reason to build solar in Panama.
Panama's Solar Explosion
The numbers tell the story better than almost anything else.
Panama ended 2024 with nearly 700 MW of installed photovoltaic capacity, and solar accounted for 7.76% of actual electricity generation that year.
That's particularly impressive because Panama already has an enormous renewable-energy resource in another form:
hydroelectricity.
Hydropower has historically dominated Panama's electricity generation. In 2024, hydroelectric plants produced roughly 60% of the country's electricity, according to figures reported from national energy statistics.
Solar is therefore not replacing a country that was completely dependent on oil.
Instead, it is becoming another major piece of Panama's increasingly diversified electricity system.
And that's important.
The Secret Advantage: Solar and Hydro Can Work Together
One of the most interesting things about Panama's energy system is that solar and hydroelectricity can complement each other.
Imagine a sunny afternoon.
Solar farms are producing enormous amounts of electricity.
At the same time, hydroelectric reservoirs don't necessarily need to produce as much electricity.
Then the sun goes down.
Solar production falls to zero.
Hydroelectric plants can increase their output.
This doesn't mean the two technologies automatically operate perfectly together, electricity systems are complicated, and Panama still has to manage transmission, demand, weather and generation timing.
But fundamentally, hydro and solar can be complementary resources.
That makes solar particularly interesting for Panama.
The Growth of Solar Farms
One of the biggest changes isn't simply the number of solar panels.
It's the scale.
Panama is moving from individual installations toward utility-scale solar farms containing tens of thousands or even hundreds of thousands of panels.
One spectacular example is Santiago Solar in Veraguas.
The project, inaugurated in 2025, has a capacity of approximately 86.3 MWp and involved an investment of around $70 million. It contains more than 130,000 bifacial solar panels. The project also included the planting of 15,000 native trees and generated more than 300 jobs during development.
Think about that.
More than 130,000 panels sitting together in one enormous solar installation.
And that's just one project.
Chiriquí Is Becoming Part of the Solar Story
For people traveling through western Panama, the solar boom is particularly interesting because Chiriquí has become an important location for new photovoltaic projects.
In late 2024, two 30 MW solar plants called Baco and Madre Vieja entered commercial operation in the Barú district of Chiriquí.
Together, they represent 60 MW of solar capacity.
Baco alone contains more than 50,400 solar panels spread across approximately 32 hectares, with estimated annual generation of about 48 GWh.
And that's fascinating when you think about the contrast.
Chiriquí is famous for mountains, coffee plantations, volcanoes, cloud forests and beaches.
Now it is also becoming part of Panama's renewable-energy landscape.
Why Are Investors Suddenly Interested?
Solar farms aren't cheap to build.
A project requires land, panels, inverters, electrical infrastructure, grid connections, engineering, financing and maintenance.
So why are companies suddenly willing to put tens of millions of dollars into them?
One major reason is that the economics have improved.
Solar panels have become far cheaper than they once were, while their efficiency and reliability have improved enormously.
Another reason is that investors can sign long-term power-purchase agreements, giving them a relatively predictable buyer for the electricity their project generates.
Santiago Solar, for example, has a long-term electricity contract with Enel, providing an important element of financial stability for the project.
A separate 24 MW solar project acquired in 2025 also had a 10-year, dollar-denominated power-purchase agreement, demonstrating how these contracts can help make solar projects attractive to investors.
That's an important change.
Solar isn't simply being built because people think it's environmentally friendly.
It's increasingly being built because the numbers can make sense.
Panama Has an Enormous Amount of Sun
Of course, none of this would matter if Panama didn't have good solar resources.
Fortunately, it does.
Panama's tropical location means that sunlight is available throughout the year. There is a rainy season, and clouds obviously reduce solar production, but solar panels don't need perfectly clear skies to produce electricity.
And there's an interesting misconception about tropical countries:
Rain doesn't mean solar panels are useless.
Photovoltaic panels can still generate electricity under cloudy conditions, although output is lower than under strong direct sunlight.
In Panama, the challenge isn't whether the sun exists.
It's how efficiently the country can capture it and integrate it into the electrical grid.
The Rise of Distributed Solar
Solar farms are only half of the story.
Another revolution is happening on rooftops.
Businesses, hotels, factories, farms, warehouses and homes can install their own photovoltaic systems.
Instead of buying every kilowatt-hour from the grid, they can generate some of their electricity themselves.
For a business operating during daylight hours, this can make particular sense.
Imagine a hotel with air conditioning, refrigerators, pumps, computers and other equipment running throughout the day.
The building is consuming electricity precisely when the sun is shining.
Put solar panels on the roof and part of that daytime electricity demand can be supplied directly by the sun.
That's fundamentally different from building a giant solar farm hundreds of kilometers away.
The electricity can be generated exactly where it's being consumed.
Solar Is Especially Interesting for Panama's Remote Areas
Panama's geography makes distributed solar even more intriguing.
The country has mountains, islands, jungle communities and remote settlements where extending traditional electrical infrastructure can be expensive.
A solar installation combined with batteries can provide electricity without requiring a conventional grid connection.
For a remote lodge, island property or mountain community, this can be transformative.
Instead of constantly transporting fuel for a generator, the basic energy source is arriving from the sky every morning.
The sun rises.
The panels start producing.
The batteries charge.
People go about their day.
And the system quietly produces electricity.
But Solar Isn't Perfect
There's an important catch.
The sun goes down.
At night, solar panels produce essentially no electricity.
Clouds and storms also reduce production.
Panama's rainy season therefore presents a particular challenge because electricity production from solar fluctuates with weather.
That's why batteries, hydroelectricity, natural gas, other generation technologies and a strong transmission network remain important.
The future isn't necessarily going to be:
"Everything becomes solar."
It's much more likely to be:
"Solar becomes one of several major pieces of a diversified energy system."
Panama's planners recognize this challenge. In 2025, authorities announced plans for a dedicated solar auction scheduled for 2026, with contracted photovoltaic supply expected to begin in 2028. Officials specifically noted that solar's low cost was attractive while also emphasizing the need to manage the timing and concentration of generation.
That is a very revealing statement.
Panama isn't asking whether solar works anymore.
It's increasingly asking:
How much solar can the grid handle, where should it go, and how do we make it work with everything else?
The Future Could Be Very Bright
Panama finished 2024 with roughly 695 MW of installed solar capacity.
But that number is only a snapshot.
New projects are coming online.
Existing projects are expanding.
Investors are entering the market.
And the government is planning additional procurement specifically for solar.
International Renewable Energy Agency data also tracks Panama's continued expansion of renewable generation capacity through 2025, reflecting the broader growth of renewables worldwide.
The really interesting part is that solar technology is still evolving.
Panels are becoming more efficient.
Bifacial panels can capture light reflected from the ground.
Inverters are becoming smarter.
Battery storage is improving.
Grid-management technology is becoming more sophisticated.
And solar farms can increasingly be combined with agriculture, vegetation management and other land uses.
A Different Kind of Panama
For decades, when people imagined Panama's energy future, they probably thought about rivers.
Panama has enormous hydroelectric potential, and water has played a dominant role in its electricity system.
Now there is another resource everywhere around us.
Sunlight.
It falls on the roofs of Panama City.
It falls on farms in Chiriquí.
It falls on the dry landscapes of Azuero.
It falls on warehouses, hotels and factories.
It falls on the same jungle that attracts millions of people to Panama.
And increasingly, Panama is learning how to turn that sunlight into electricity.
That's why solar farming has become so popular now.
It's not simply because Panama is becoming "greener."
It's because solar has finally reached the point where environmental benefits, technological improvements, abundant sunlight and economics are all pointing in the same direction.
The country that built one of the world's greatest engineering projects by connecting two oceans is now quietly undertaking another transformation.
Not through canals.
Not through dams.
But through millions of photovoltaic cells quietly turning tropical sunlight into electricity.
And when you drive through Panama in the coming years, don't be surprised if the landscape increasingly contains something that would have seemed unusual only a decade ago:
A sea of solar panels stretching across the countryside, harvesting the same powerful sun that has been shining over Panama for millions of years.