The six Central American countries ofCosta Rica, El Salvador, Guatemala, Honduras, Nicaragua andPanama share a long tradition of regional integration,including a common market, substantial intraregional trade,as well as coordinated commercial policies, such as theCentral American Free Trade Agreement (CAFTA) with the US.The most significant example of regional integration in theenergy subsector consists of the Sistema de InterconexionElectrica para America Central (SIEPAC), an interconnectionline that is expected to link the six countries in mid-2010.The creation of the interconnection has been a long-termeffort, starting in the early 1990s and culminating in 2010.This report provides an overview of the energy sector inCentral America, with a focus on the power subsector, andhighlights the key challenges and options for meeting futureenergy and development goals. One of the main objectives ofthe study is to identify paths for collective action wherebyindividual countries, and the region as a whole, couldbenefit from a more integrated approach to developing energyinfrastructure and connecting energy markets.