Renewable energy revolution steams forward

With little fanfare, Polaris geothermal plant is well on its way to becoming the country’s largest clean energy provider by the end of 2012

Nicaragua’s renewable energy revolution continues to steam forward with the recent launch of Polaris’s new 36-megawatt geothermal plant at the San Jacinto Tizate site, located on the skirts of the Santa Clara Volcano in León.

The new volcanic-powered plant, which is expected to be inaugurated in an official ribbon-cutting event in the coming weeks, makes Polaris the leading geothermal producer in the country. The Canadian company—a subsidiary of Ram Power Corp.—has surpassed the production level of Nicaragua’s older Ormat geothermal plant, which is producing 29-megawatts in nearby Nagarote.

And Polaris is just firing up. By the end of the 2012, Polaris will complete phase II, providing an additional 36-megawatts of power. That will bring Polaris up to 72-megawatts by December, making it Nicaragua’s single-largest power provider. By 2013, Polaris will install an additional 13-megawatt binary plant, topping off its expansion at 85-megawatts—nearly one-sixth of Nicaragua’s total energy demand.  

In human terms, Polaris will be generating enough juice to power more than half a million homes in Nicaragua, according to company president Mario Arana.

“This will mean an annual savings of $90 million in the country’s energy bill, given the current price of oil,” Arana told The Nicaragua Dispatch in an interview this week. “This is clean, base-load energy that can be produced at 95% all year long. So it complements very well with wind energy, hydroelectric and biomass power plants, which are more intermittent sources of energy.”

Clean steam

Geothermal power converts natural volcanic steam into energy in a manner proponents say is environmentally friendly and 100% renewable.

Harnessing the volcano (photo/ Diogenes Ruiz)

The energy is produced by drilling wells as deep as 2 kilometers into the porous rock surrounding volcanoes. The steam from the wells is passed through units that separate the liquid brine (saltwater) from the dry steam, which then passes through turbines that convert the steam into energy.

The brine is re-injected into the ground, so as not to upset the natural balance of the site. Underground magma produces a constant source of heat, which then converts the re-injected brine solution back into steam, completing a sustainable cycle.

Geothermal plants emit small amounts of non-condensable gas, namely carbon dioxide. But the gas discharge is less than 5% of that which occurs at fossil fuel plants, according to the World Bank

The start-up cost and investment risk associated with geothermal energy production is considerably higher than power plants that run on fossil fuels or even other renewable energy sources. But once operational, pollution from geothermal plants is negligible, operation costs are lower and energy production is sustainable, according to project engineers.

According to early estimates, Nicaragua was thought to have upwards of a 2,000-megawatt potential for geothermal energy. Today, those estimates have been shaved back to a more conservative 800 megawatts. Still, that’s more than 10 times what Polaris will produce, and more than enough to cover Nicaragua’s total energy demand of 560 megawatts.

“Geothermal energy is a resource that is totally underused in this country,” Arana says.

It’s also an underused in Central America, given the amount of volcanic activity in the region. Even when Polaris is producing at 100% by next year, Nicaragua will be producing only about half as much geothermal energy as neighboring Costa Rica and El Salvador, which are pumping out about 160 megawatts each. Guatemala and Panama are even further behind in geothermal technology.

Steaming forward

Mario Arana (photo/ Tim Rogers)

Despite earlier setbacks and few political hiccups after the Sandinistas returned to power in 2007, Polaris got back on track and reclaimed its spot at the vanguard of Nicaragua’s energy revolution, which boldly aims to reduce the country’s crippling energy dependence from 70% to 6% by the end of 2016.

Polaris has quietly invested $380 million in Nicaragua, and will pony up another $46 million by the end of the year, according to Arana.

Even more impressive is how Polaris put together the financing for the project, one of the biggest private investments in Nicaragua’s history.

The company, which is publically traded on the Toronto Stock Exchange, attracted financing from institutional investors in the U.S., Europe and Canada, as well as the Central American Bank of Economic integration, the World Bank’s International Finance Corporation, and five European banks, three of which had never before invested in Nicaragua.

Arana says several of those European banks are now considering investment in other clean-energy projects in Nicaragua.

When will consumers benefit?

Arana says the increase in geothermal production could translate into a slight decrease in consumers’ monthly energy bills, but there are a lot of other complex factors involved that are out of the company’s control.

Still, as Nicaragua moves towards 50% renewable energy by 2013, consumers will first notice a stabilization of energy costs, which are constantly climbing in Nicaragua.

“There should be a slight savings, but above all it will stabilize the electricity rates and make Nicaragua less susceptible to fluctuations in world old prices,” Arana said. “The most important is that energy prices will stabilize. This is an important contribution because it will allow for long-term economic planning.”

  • Rozza

    Mario Arana is the director of “Fundación Nicaragüense para el Desarrollo Económico y Social” – FUNIDES. I think it’s also relevant to mention that Polaris is working in a strategic partnership with Brazilian engineering company “Queiroz Galvao”, which is contributing to the “energy revolution” with another project as well – a hydroelectric plant, in San Pedro del Norte, (RAAS).

  • Nica en NYC

    Rizzo – Mario Arana is not “the” director of FUNIDES. He is only a director, i.e. a member of the board of directors. FUNIDES’ chairman of the board is Jose Antonio Baltodano and its chief executive is Carlos Muñiz. I would like to know whether Polaris has any Nicaraguan partners and who they are.

    • Rozza

      Thanks for clarifying that, I read an article on a Nicaraguan newspaper that referred to him as “el director”. I don’t think Polaris has any Nicaraguan partners, but I don’t know that for sure. I have a friend at Queiroz Galvao and that’s why I know about their projects.

  • MStraub

    Nicaragua sits in a unique position to be a leader in Central America, and the world for that matter, in leading the way to a renewable energy future. Has the Dispatch considered doing any stories on Ocean Thermal Energy Conversion (OTEC)? It produces endless emission free power from the temperature difference in shallow and deep ocean water. Plus, the only byproduct is clean drinking water. Think about that, endless, affordable and reliable power, plus millions of gallons of water for drinking, cooking, farming, or bottling and shipping all over the world.

    So far the Bahamas is leading the way in OTEC development, with multiple projects in the works. It’s worth a story, Nicaragua could really benefit from OTEC power.

    Lots more OTEC info and news at The On Project.

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