Countries › Guatemala › Guide › 12. Sectors › Energy, mining and key sectors in Guatemala: free power generation, the wholesale market, renewable incentives, mining licences, royalties and fees

Energy, mining and key sectors in Guatemala: free power generation, the wholesale market, renewable incentives, mining licences, royalties and fees

Last verified: 2026-10-29 · Status: Stable

Guatemala opened its power sector in 1996: generating electricity is free and needs no State permit unless a plant above 5 MW uses public property such as a river, and generation, transmission and distribution must sit in separate companies, with the CNEE regulating tariffs and a private nonprofit, the AMM, running the wholesale market. Consumers above 100 kW are large users who buy at freely agreed prices, distributors must buy their power through open tenders, and renewable projects (hydro, solar, wind, geothermal, biomass) get duty and VAT free equipment imports for up to 10 years of preinvestment and construction plus a 10 year income tax exemption from commercial operation. Mineral deposits belong to the State but any Guatemalan or foreign person may hold a licence: exploration up to 100 km2 for 3 years plus two 2 year extensions, exploitation up to 20 km2 for 25 years renewable once, a royalty of 0.5 percent to the State and 0.5 percent to the municipality, and annual surface fees in units worth Q120 to Q1,000.

USD figures use Q7.64427 per US dollar, the Banco de Guatemala reference rate for 28 October 2026, the latest rate returned by the Banguat exchange rate web service on the verification date. Conversions are for orientation only; mining fees and royalties are paid in quetzales.

Key facts

Power generation needs State authorization	No; free, except an MEM authorization for plants above 5 MW that use State property textDecreto 93-96 art. 1 a) and 8, as of 2026-10-29 · in force
Plant size above which use of State property needs MEM authorization	5 MWDecreto 93-96 art. 8, as of 2026-10-29 · in force
Maximum term of an MEM generation, transmission or distribution authorization	50 yearsDecreto 93-96 art. 13, as of 2026-10-29 · in force
Time for MEM to decide a generation authorization	90 daysDecreto 93-96 art. 8, as of 2026-10-29 · in force
Demand above which a consumer is a large user with free pricing	100 kWAcuerdo Gubernativo 256-97 art. 1 as amended by AG 68-2007, as of 2026-10-29 · in force
Distributor contract cover required	Full power and energy needs for the current and next calendar year, bought through open tenders textDecreto 93-96 art. 53 and 62, as of 2026-10-29 · in force
Income tax exemption for renewable power projects	10 yearsDecreto 52-2003 art. 5 b), as of 2026-10-29 · in force
Maximum period of duty and VAT free equipment imports for renewable projects	10 yearsDecreto 52-2003 art. 5 a), as of 2026-10-29 · in force
Mining royalty (metallic and other minerals)	1 (0.5 to the State plus 0.5 to the municipality) %Decreto 48-97 art. 63, as of 2026-10-29 · in force
Royalty on construction materials, to the municipality	1 %Decreto 48-97 art. 63, as of 2026-10-29 · in force
Exploitation licence term	25 years, extendable once for 25 textDecreto 48-97 art. 28, as of 2026-10-29 · in force
Maximum exploitation licence area	20 km2Decreto 48-97 art. 29, as of 2026-10-29 · in force
Exploration licence term	3 years plus two extensions of 2 years, area cut by 50 percent at each textDecreto 48-97 art. 25, as of 2026-10-29 · in force
Maximum exploration licence area	100 km2Decreto 48-97 art. 24, as of 2026-10-29 · in force
Annual exploitation surface canon, precious metals	12,000 GTQ per km2Decreto 48-97 art. 66 d) and 67; Acuerdo Ministerial 08-2017, as of 2026-10-29 · in force
Grant canon for any mining right	1,300 GTQDecreto 48-97 art. 66 a), as of 2026-10-29 · in force
Foreign persons may hold mining rights	Yes, on the same terms as nationals textDecreto 48-97 art. 9, as of 2026-10-29 · in force

The rule

1. Generation is free and the sector is unbundled. The Ley General de Electricidad governs generation, transmission, distribution and trading of electricity by any private, mixed or State person. Generating electricity needs no authorization or prior condition from the State beyond those in the Constitution and the laws; transmission is free when it uses no public property, and private distribution is free. Installing a power plant needs no government authorization, but a plant above 5 MW that uses State property (for example water for a hydro plant, or a geothermal resource) needs a Ministerio de Energía y Minas (MEM) authorization, which the Ministry must decide within 90 days once the environmental impact assessment requirement is met. Transmission using public property and final distribution service also need an MEM authorization, granted by ministerial agreement for at most 50 years and never exclusive, so third parties may compete in the same service. Anyone who both generates and transmits or distributes in the national system must do so through separate legal entities, except plants of up to 5 MW and municipal power companies. Generation and transmission projects must file an environmental impact assessment, which the environmental authority must rule on within 60 days. Prices are free except regulated transmission and distribution.
Cost to do it: No licence fee is set in the law for a generation plant; the costs are the environmental study, the authorization file for plants above 5 MW using State property, transmission tolls and connection works (art. 65 obliges generators to build their own link to the main grid or pay secondary tolls).
Example: A 3 MW solar plant on private land needs no MEM authorization under art. 8, only its environmental approval and grid connection; a 30 MW hydro plant on a river needs an MEM authorization for the use of the water as State property. / A foreign investor building a US$40 million hydro plant applies for an MEM authorization of up to 50 years; the Ministry has 90 days to decide once the environmental requirement is met.Decreto Nº 93-96 del Congreso, Ley General de Electricidad (issued 16 October 1996, published in the Diario de Centro América and in force on 15 November 1996), Art. 1, 2, 7, 8, 9, 10, 13 and 14, 1996-11-15 official text · verified 2026-10-29

2. Wholesale market, large users and distributor tenders. The Comisión Nacional de Energía Eléctrica (CNEE), a technical body of the MEM with functional independence, enforces the law, sets transmission and distribution tariffs and their methodology, issues technical standards, guarantees open access to lines and networks and arbitrates disputes between agents. The wholesale market is run by the Administrador del Mercado Mayorista (AMM), a private nonprofit entity that coordinates dispatch of plants, international interconnections and lines at minimum cost within free contracting between generators, traders, importers, exporters, large users and distributors, and sets short term market prices for transfers not covered by contracts. A large user (gran usuario) is a consumer whose demand exceeds 100 kW, or a lower limit set by the MEM; it is not subject to price regulation and agrees supply terms freely with the distributor or any other supplier. Distributors must at all times hold contracts covering their full power and energy needs for the current and the next calendar year, and must buy electricity through open tenders. Tolls not agreed between the parties are set by the CNEE.
Cost to do it: No fee to qualify as a large user; the costs are the agreed energy price, the CNEE regulated tolls for using transmission and distribution networks, and registration as a market participant under the AMM rules.
Example: A plant with 450 kW of demand can sign a bilateral contract with a generator or trader instead of paying the distributor's regulated tariff, paying the distributor only the network toll. / A data centre drawing 2 MW negotiates a supply contract priced in US dollars with a generator, while a shop drawing 60 kW stays on the regulated tariff.Decreto Nº 93-96, Ley General de Electricidad; Acuerdo Gubernativo Nº 256-97, Reglamento de la Ley General de Electricidad (21 March 1997), as amended by Acuerdo Gubernativo Nº 68-2007 (in force 6 March 2007), LGE art. 1 d), 4, 44, 53, 59 and 62; Reglamento art. 1 (definition of Gran Usuario), 2007-03-06 official text · verified 2026-10-29 · changed: Acuerdo Gubernativo 68-2007, in force 6 March 2007, rewrote many articles of the 1997 regulation; the compiled regulation published by the CNEE also notes amendments by Acuerdos Gubernativos 787-2003 (in force 17 January 2004) and 145-2008 (in force 27 May 2008).

3. Renewable energy incentives. Municipalities, the State utility INDE, mixed companies and private individuals and companies that carry out power projects with renewable resources (solar, wind, hydro, geothermal, biomass, tidal and others the MEM qualifies) get: (a) exemption from import duties, VAT and consular charges on machinery and equipment used only for generation in the project area, during the preinvestment and construction periods, for at most 10 years, applied for to SAT before each import; (b) exemption from income tax for 10 years from the start of commercial operation, only for the person that develops the project directly and only for that project's income; and (c) a 10 year exemption from IEMA, a tax that no longer exists. The project owner also owns and may sell its emission reduction certificates. The MEM qualifies the project (its directorate has 20 days to issue an opinion after the file is complete, then the Ministry decides), and SAT must issue the exemption resolution within 30 days of the request or it is deemed granted. Equipment of contractors or subcontractors does not qualify, and exempt goods may be transferred only with MEM authorization after paying the customs taxes.
Cost to do it: No application fee is set in the law or regulation; the cost is preparing the MEM file (project documents, schedule, equipment list) and keeping a register of exempt imports reported to the MEM and SAT customs every six months.
Example: A wind project importing Q114,664,050 of turbines (CIF) saves at least the 12 percent import VAT, Q13,759,686, plus any duty; once operating, Q7,644,270 a year of project profit that would pay 25 percent income tax saves Q1,911,067.50 a year for 10 years. / On US$15 million of equipment the VAT saving alone is US$1.8 million; on US$1 million of annual project profit the income tax saving is US$250,000 a year.Decreto Nº 52-2003 del Congreso, Ley de Incentivos para el Desarrollo de Proyectos de Energía Renovable (issued 28 October 2003, published 10 November 2003, in force the next day); Acuerdo Gubernativo Nº 211-2005, Reglamento (16 June 2005, published 22 June 2005), Law art. 4 and 5 and 6; Reglamento art. 4, 11, 13 and 19 to 20, 2003-11-10 official text · verified 2026-10-29 · changed: Decreto 52-2003 repealed Decreto Ley 20-86, the earlier law on new and renewable energy sources.

4. Mining rights. All mineral deposits in the territory, continental shelf and exclusive economic zone belong to the State, inalienably; oil and gas are excluded and governed by separate law. Any individual or company, Guatemalan or foreign, may hold mining rights. The MEM, through its mining directorate, grants three licences: reconnaissance; exploration, an exclusive right to locate and evaluate deposits in a polygon of no more than 100 km2, for up to 3 years, extendable twice for 2 years each, cutting the area by 50 percent at each extension (the extension is automatic if requested before expiry); and exploitation, an exclusive right to mine deposits in a polygon of no more than 20 km2, for up to 25 years, extendable once for the same period. An exploitation licence requires an approved environmental impact assessment filed before work starts (also with the protected areas council if inside a protected area); reconnaissance and exploration require a mitigation study. The Constitutional Court struck out the tacit approval of these studies on expiry of the 30 day review period (ruling of 20 June 2008, file 1491-2007) and the words granting rights unlimited in depth.
Cost to do it: Grant canon of Q1,300 (about US$170) on notification of any mining right, plus the annual surface canons in the next rule; the environmental study and professional reports are private costs.
Example: A company that wins a 100 km2 exploration licence keeps at most 50 km2 at the first extension (year 4) and 25 km2 at the second (year 6), and then must apply for an exploitation licence of up to 20 km2. / A foreign junior can hold the licence directly or through a local company; the law draws no distinction by nationality.Decreto Nº 48-97 del Congreso, Ley de Minería (issued 11 June 1997, published in the Diario de Centro América on 17 July 1997, in force the next day); Acuerdo Gubernativo Nº 176-2001, Reglamento (published 22 May 2001), Art. 4, 8, 9, 19, 20, 24, 25, 27, 28 and 29, 1997-07-17 official text · verified 2026-10-29 · changed: Corte de Constitucionalidad ruling of 20 June 2008 (file 1491-2007) annulled the tacit approval of environmental and mitigation studies in art. 19 and 20 and the phrase 'e ilimitadamente en la profundidad del subsuelo' in art. 24 and 27.

5. Mining royalties and fees. Exploitation licence holders pay a royalty of 0.5 percent to the State and 0.5 percent to the municipality where the minerals are extracted (shared by extraction volume if several municipalities), on the sworn volume of product sold valued at domestic or international market quotations; quarries of construction materials pay 1 percent to the municipality only. Royalties are settled and paid annually within 30 days after each calendar year ends; late payment bears interest at the average lending rate of the banking system. Surface canons are paid in advance in units: exploration 3 units per km2 a year for the first three years, 6 in the first extension and 9 in the second; exploitation 12 units per km2 a year, paid in January (prorated in the first year); a reconnaissance canon of Q120 per km2 once; and transfer canons of 3 units per km2 (exploration) and 5 units per km2 (exploitation). The law fixes a unit at Q100 to Q1,000; Acuerdo Ministerial 08-2017 sets it at the base value times a mineral factor of 1 to 5: Q1,000 for exploration and for precious metals, semiprecious and precious stones, platinum group metals and rare earths; Q800 for non metallic minerals, base metals, carbonate rocks, clays and decorative stones; Q600 for construction materials.
Cost to do it: A 20 km2 precious metals exploitation licence pays 12 x Q1,000 x 20 = Q240,000 (about US$31,396) a year in surface canon; a 100 km2 exploration licence pays 3 x Q1,000 x 100 = Q300,000 (about US$39,245) a year in years 1 to 3.
Example: A gold mine selling Q76,442,700 of product in 2026 pays Q382,213.50 to the State and Q382,213.50 to the municipality by 30 January 2027, plus Q240,000 of surface canon paid in January. / On US$10 million of sales the royalty is US$50,000 to the State and US$50,000 to the municipality, 1 percent in total, before income tax.Decreto Nº 48-97, Ley de Minería; Acuerdo Ministerial Nº 08-2017 del Ministerio de Energía y Minas (5 January 2017, published in the Diario de Centro América on 9 January 2017), Ley de Minería art. 61, 62, 63, 64, 66 and 67; Acuerdo Ministerial 08-2017 art. 1 to 3, 2017-01-09 official text · verified 2026-10-29 · changed: Decreto 22-2014, art. 61, tried to reform the royalty in art. 63 from 1 January 2015, but the Constitutional Court declared it unconstitutional on 13 November 2015 (files 1-2015 and joined), so the original 0.5 plus 0.5 percent text remains in force. Acuerdo Ministerial 08-2017 repealed Acuerdo Ministerial 387-2015 on the unit value.

Sector	Main law	Authority	Entry rule	State take
Power generation	Decreto 93-96 and AG 256-97	MEM, CNEE, AMM	Free; MEM authorization of up to 50 years only above 5 MW using State property	Income tax and VAT; tolls for networks
Transmission and distribution	Decreto 93-96	MEM, CNEE	MEM authorization of up to 50 years, non exclusive; separate company from generation	CNEE regulated tolls and tariffs
Renewable generation	Decreto 52-2003 and AG 211-2005	MEM, SAT	MEM qualification of the project	10 year income tax exemption; duty and VAT free equipment for up to 10 years
Mining	Decreto 48-97 and AG 176-2001	MEM mining directorate	Reconnaissance, exploration (100 km2, 3+2+2 years) and exploitation (20 km2, 25+25 years) licences	1 percent royalty plus surface canons in units of Q600 to Q1,000

Main sector rules for investors in Guatemala, by sector (official texts linked in the rules above).

Right and mineral	Units per km2 a year	Unit value	Canon per km2 a year	Example area and annual canon
Exploration, years 1 to 3	3	Q1,000	Q3,000 (US$392)	100 km2: Q300,000 (US$39,245)
Exploration, first extension	6	Q1,000	Q6,000 (US$785)	50 km2: Q300,000 (US$39,245)
Exploration, second extension	9	Q1,000	Q9,000 (US$1,177)	25 km2: Q225,000 (US$29,434)
Exploitation, precious metals	12	Q1,000	Q12,000 (US$1,570)	20 km2: Q240,000 (US$31,396)
Exploitation, base metals or non metallic minerals	12	Q800	Q9,600 (US$1,256)	20 km2: Q192,000 (US$25,117)
Exploitation, construction materials	12	Q600	Q7,200 (US$942)	20 km2: Q144,000 (US$18,838)

Mining surface canons in 2026 under Decreto 48-97 art. 66 and Acuerdo Ministerial 08-2017, at Q7.64427 per US dollar.

Worked example

A foreign mining company holds a 20 km2 gold exploitation licence and sells Q76,442,700 (US$10 million) of doré in 2026, at the 28 October 2026 reference rate.
Surface canon paid in January 2026: 12 units x Q1,000 x 20 km2 = Q240,000 (about US$31,396).
Royalty due by 30 January 2027: 0.5 percent to the State, Q382,213.50, and 0.5 percent to the municipality, Q382,213.50, a total of Q764,427 (US$100,000), filed with a notarized sworn declaration of volumes sold.
Separately, a 20 MW solar project qualified by the MEM imports US$15 million of equipment free of the 12 percent import VAT (a US$1.8 million cash saving) and, once operating, pays no income tax on the project's profit for 10 years.

Step by step

1. Power: check whether the plant exceeds 5 MW and uses State property (water, geothermal resource); if so, prepare the MEM authorization file under LGE art. 14 and the regulation.
2. File the environmental impact assessment with the environmental authority before construction (LGE art. 10; for mines, Ley de Minería art. 20).
3. Agree a grid connection and tolls; build the link to the main system or pay secondary tolls (LGE art. 65), and register as a wholesale market agent under the AMM rules.
4. Renewables: apply to the MEM for project qualification with the schedule and equipment list (Reglamento AG 211-2005 art. 3 and 4), then present the MEM certification to SAT before each import (SAT has 30 days).
5. Large consumers above 100 kW: compare the regulated tariff with bilateral supply contracts from generators or traders.
6. Mining: apply to the MEM mining directorate for an exploration licence (up to 100 km2), pay the Q1,300 grant canon on notification and the surface canon in the first month of each year, file the annual exploration report within three months of each year end, and request extensions before expiry.
7. Before mining, obtain the exploitation licence (up to 20 km2) with an approved environmental impact assessment, register it in the Registro General de la Propiedad (Reglamento art. 5), and calendar the January canon and the 30 January royalty payment.

Common traps

Reading 'free generation' as 'no permits'. A hydro or geothermal plant above 5 MW needs an MEM authorization to use State property, and every generation project needs environmental approval; since the 2008 Constitutional Court ruling there is no tacit approval of mining environmental studies (Ley de Minería art. 19 and 20).
Owning generation and distribution in one company. Integrated groups must split generation, transmission and distribution into separate legal entities, save for plants up to 5 MW and municipal utilities (LGE art. 7).
Counting on an IEMA exemption. The renewables law exempts income tax and IEMA, but IEMA no longer exists; the law does not mention the current Impuesto de Solidaridad, so model it as payable unless another exemption applies.
Importing equipment for a contractor under the renewables exemption. Machinery of contractors or subcontractors does not qualify, and selling exempt equipment requires MEM authorization and payment of the customs taxes first (Reglamento AG 211-2005 art. 11 and 13).
Assuming a higher or lower royalty from press reports. The 2014 reform of the royalty was annulled by the Constitutional Court in 2015, so the original 0.5 plus 0.5 percent in art. 63 applies, as the MEM compiled text of the law confirms.
Letting the exploration area shrink by surprise. Each extension cuts the area by 50 percent unless the directorate authorizes a smaller cut, and the extension is automatic only if requested before the licence expires (art. 25).

Sources

← Buying and owning real estate in Guatemala: who may buy, coastal and border limits, VAT or stamp tax on purchase, IUSI property tax and the 2026 reform, rent and gains

Get rule changes weekly

Free. One email a week from The LatAm Thread.

One more step after you press the button: we take you to Substack, where your email is already filled in. Confirm there to start. No spam, unsubscribe anytime, we never share your address. By subscribing you agree to the privacy policy.