Nicaragua’s renewable energy revolution underway

After surviving a crippling energy crisis, Nicaragua is changing tack and setting a new course towards energy security, reducing its dependence on foreign oil from 80% to 6% within a decade. If all goes according to government plan, Nicaragua will convert its energy sector from the basket case of Central America to an international leader in renewable technologies by 2016. Part I in a special series on Nicaragua’s renewable energy revolution.

Five years ago, Nicaragua was on the brink of a modern “dark age.”

Years of political myopia, partisan brinksmanship and fumbling mismanagement had pushed Nicaragua to the edge of political and economic collapse and social upheaval. At the center of Nicaragua’s malady was its most perplexing and debilitating symptom: a head-pounding energy crisis.

By 2006, Nicaragua was bedridden by energy shortages. Daily power-rationing blackouts lasted 6-10 hours, and even when the lights came back on, they did little to brighten the country’s prospects.

The country’s aging power grid, fueled by a feeble and sputtering collection of broken down and under-achieving energy plants, was unable to meet the country’s meager electricity demand. As a result, Nicaragua’s economy flickered off and on with the lights, and social tensions lit every time the power dimmed.

That was then. Five years later, Nicaragua’s future is looking a lot brighter.

Since returning to power in 2007, the Sandinista government has worked with the private sector and Venezuela’s Hugo Chávez to fix the immediate energy problem by installing an additional capacity of 343 megawatts of power— 41% more power than Nicaragua was producing five years ago.

Now, for the first time in more than a decade, Nicaragua is producing a comfortable surplus of energy.

With electricity demand finally being met, the government is now moving to phase II of its energy revival: Switching to renewable energy and weaning Nicaragua off its insalubrious and dipsomaniacal craving for foreign oil.

Nicaragua, despite its abundant rivers, lakes, volcanoes and wind-swept plains, was foolishly designed to be a gas-guzzler. While that’s a relative dependency by international standards (Nicaragua consumes 14.6 million barrels of petroleum a year, about 22% less than what the United States consumes in a day), oil accounts for 70% of Nicaragua’s power generation, so the economy takes a kick to the shins every time international mischief sends petroleum prices soaring.

In fact, Nicaragua has the highest energy costs in Central America, despite having the poorest economy. Electricity costs have become so high in Nicaragua that the Sandinista government is partially subsidizing a good chuck of the country’s electricity bill; 80% percent of households receive an electricity subsidy, according to the government.

Not only is the situation unsustainable, it’s also worsening. Electricity rates were hiked again by 9% on Jan. 5, forcing the government to dig deeper into its ALBA-lined pockets to pay for the continued subsidies.

Energized: Nicaragua’s Paul Oquist, left, and Emilio Rappaccioli (photo/ Tim Rogers)

So not only is renewable energy a nature-friendly idea, it’s also imperative to Nicaragua’s survival.

“The energy issue is an essential component for our sustainable development to assure the wellbeing and progress of the current and future generations,” said Emilio Rappaccioli, Nicaragua’s Minister of Energy and Mines.

The switch to renewable energy sources, therefore, has become a linchpin in the Sandinista government’s national development plan.

Not only will it reduce the economy’s tremulous dependency on foreign oil, but it will also help the government bring electrification, development and progress to the countryside, and do so in a way that protects the environment by deterring deforestation and reducing harmful emissions, administration officials say.

“This is about the conservation of natural resources, assuring energy security policies and ensuring the competitiveness of the country,” Rappaccioli said.

Presidential advisor Paul Oquist, a fierce statist, academic and leading voice on Sandinista development policy, adds that renewable energy policy is also key to providing citizen security, labor stability, peace and development in the country.

“Who is going to invest in a country without energy?” Oquist demanded.

 The switch from black to green

Although Nicaragua’s 40% increase in energy production over the past five years has come mostly through the smoking stacks of eight fuel-burning power plants from Venezuela, the country’s renewable revolution has already started.

Geothermal production has increased and Nicaragua has started a very successful foray in to wind-energy production on the privately owned Amayo I and II wind farms, which are now producing 63 megawatts of power.

By the end of 2012—a year the UN has dubbed “The Year for Sustainable Energy for All”—Nicaragua hopes to reduce its dependency on foreign oil by an additional 10%, finishing the year with an energy matrix that is 40% from renewable sources (hydroelectric, geothermal, wind and biomass).  

And that’s just the beginning. By 2016, once the massive Tumarín hydroelectric plant comes on line, generating an additional 253 megawatts of power (50% of the country’s total energy demand), Nicaragua will generate 94% of its own electricity from renewable energy sources, and only have to pony up to world oil costs to cover the remaining 6%.

That means in a five-year period, Nicaragua will have gone from being the most oil-dependent nation in Central America, to the least. And in a 10-year period, Nicaragua’s energy sector will have been transformed from a candle-lit backwater basket case to an international leader in renewable technologies.

National development

Nicaragua’s push for a renewable energy revolution has united the country like few other issues, and gotten people thinking—perhaps for the first time in the country’s history—in terms of long-term national development.

“This is one of the few issues in Nicaragua that has a clear long-term national vision,” Iván Cortes, director of Renewable Resources for the Ministry of Energy and Mines, told The Nicaragua Dispatch. “We have suffered personally the effects of the severe energy crisis, and that’s why the whole population supports renewable energy.”

The Sandinistas’ efforts to switch to renewable energy has also drawn nods of approval from the international community, at a time when many foreign governments are questioning many of the Ortega Administration’s other moves.

 “In keeping with United States international policies and goals, the U.S. Government recognizes ambitious efforts in Nicaragua to address climate change by radically shifting its electricity generation from petroleum-based to renewable sources within a short window of time,” says William Cobb, the U.S. Embassy’s Energy and Environment Officer.

That’s an understatement as far as Nicaraguan authorities are concerned.

“I don’t know of any other country in the world that has done this,” Oquist told The Nicaragua Dispatch, referring to Nicaragua’s planned 70% reduction in oil dependency in slightly more than seven years. “You must recall that this is taking place in the second-poorest country in Latin America and amid the worst financial, economic social and increasingly political crisis of world capitalism since the Great Depression of the 1930s.”

 

  • Pedro Arauz

    Is it a coincidence but the picture of the morning glory at the El Tuma was built during the Somozas, I was there during ignaguration and still works and shows the way….

  • http://none David Olsen

    This is quite impressive! It’s an example to all nations when it comes to energy policy. Now, I also hope that small decentralised energy producers (those with solar panels on their house) can feed the greed and turn Union Fenosa’s meter backward or pay us.

    The article does not mention that the Central American grid is becoming interconnected. Nicaragua will be able to sell excess to neighbouring countries.

    Smart!

  • A Gomez

    It was Somoza who introduced Geothermal and Hydro in Nicaragua in the 70′s, not the Sandinistas.The 343 MW that were introduce by Venezuela are based on diesel (oil) not renewable energy at an insane overpriced rate!! Nicaragua can only count with brazilian and venezuelan new investments, no one else is coming!

  • W. Tyler

    Every foreign investor in the energy sector has been harassed and extorted by the Nicaraguan government once they are already established in the country. Be very careful for those who has the audacity to invest in Nicaragua. http://www.doingbusiness.org/data/exploreeconomies/nicaragua/

  • Nick

    Stay tuned for news about investing in solar farms.
    It would also be a good idea for the government to eliminate sales tax and import duties on home solar and wind systems.

  • Mahmoud

    I have recently come to the solemn realization that I am a dipsomaniac as well.

  • Erick

    Nicaragua Nicaraguita…….! :)

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  • Michele Romanin

    I am Italian, working for a small investment fund in solar energy, my goal would be to transfer to Nicaragua and work in the renewable business (solar or hydroelectric) so I am very glad to read these articles.
    Never the less I think it is very challenging to invest or work in Nicaragua (in this sector) without good connections. This is a pity because there are plenty of investors willing to go into a new market, but they need certainty for their investments

    • Rita Lugo

      As an Italian you should have plenty of experience with Thermal energy as Italy is leading the way in this field. Otherwise you can always open an Italian restaurant!

    • VICTOR

      WRITE TO ME AT PHENICIO@HOTMAIL.COM

  • Deborah Elliott

    We live in Puerto Cabezas, the NE corner of Nicaragua. I read this article with disbelief. For the past 2 1/2 years the elecricity has been off more than on and I wonder if I am living in the same country that this article describes

    • Tim Rogers

      Deborah, Puerto Cabezas Power provides all the energy to people in Bilwi and the surrounding area. Puerto Cabezas is on separate power grid from the rest of Nicaragua, so in that sense, no, you are not living in the same country that this article describes.

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  • http://www.gofundme.com/VolunteerNicaragua Melissa

    Less talk more action! As a young engineer and recent graduate I would like to travel to Nicaragua to volunteer for two months to bring solar energy to rural areas. I’m looking for a little help in funding this venture, so if you want to help me make a difference, check out my site! Thanks! http://www.gofundme.com/VolunteerNicaragua

    • Kelvin

      Melissa, I read your blog as far as “Hello All! Nicaragua, located in South America…” and stopped.

      I know you went to engineering school but you must have studied geography at some point!! :)