Nicaragua: a renewable energy paradise in Central America

By 2020, Nicaragua expects to produce 90% of its energy from clean, safe sources

Nicaragua is what many experts call a paradise of renewable energies. The country has extensive geothermic resources––resulting from its large volcanic chain and seismic activity––with excellent exposure to the wind and sun and a variety of water sources. 

In terms of energy output, the country has the capacity to generate 5,800 megawatts (MW) annually from clean sources. Currently, however, just over 5% of its renewable potential has been developed. 

Paradoxically, Nicaragua was until recently dependent on oil-based products, which were expensive and far from environmentally friendly. This was in addition to limited power lines and one of the highest electricity rates in the region at an average rate of US$ 0.24 per kilowatt/hour. 

In 2006, this scenario led the Nicaraguan government to address the need to change its electrical grid. With the government’s openness toward private investment, 58% of the country’s energy is currently produced by renewable sources whereas the remaining 42% comes from oil-based bunker fuel, according to estimates of the Nicaraguan Ministry of Energy and Mines (MEM). 

In the region, Nicaragua is second only to Costa Rica in terms of the share–– 21%––of renewable, non-hydraulic energy in the region. The energy output of its geothermic resources is considered the best in Central America, with estimated potential reserves of 1,500 MW (in addition to the country’s energy system capacity, which is 1,300 MW). However, just 154 MW have been installed by the country’s power plants, Polaris and Momotombo. 

What is geothermic energy? 

Imagine large water reservoirs hundreds of kilometers deep that come into contact with magma. The resulting steam produced needs to escape, for which reason one can see large columns of steam shooting skyward in some areas. 

Geothermic plants channel that steam to generators and when the water cools it returns to the depths. That is why it is an inexhaustible source of clean energy.

According to World Bank experts, geothermal energy can be a relatively inexpensive source of electricity, especially compared with fossil fuels.

Wind farms now line the banks of Lake Cocibolca in Rivas (courtesy photo)

“The generation of this type of energy is not only important for its positive effects on the economy, but also for its reduction of GEI emissions by almost 80,000 tons,” said Hasan Tuluy, World Bank vice-president for Latin America and the Caribbean, during a visit to the Polaris plant on October 22.

“This project will mean a savings of $88 million for the country through the reduction in oil imports. We will substitute the bunker fuel consumed in Nicaragua with clean, renewable energy,” said Alejandro Arguello, head of corporate development at Polaris, during the visit.

With the idea that the Polaris power plant in San Jacinto, in León, will supply nearly 20% of Nicaragua’s energy needs, the International Finance Corporation (IFC) partially financed the $450 million, 72MW plant.

Wind farms

Nicaragua is also focusing on another renewable energy source: wind. Huge white windmills erected on wind farms can be seen along many of the country’s roads.

On the banks of Lake Cocibolca, in Rivas, is the country’s third wind plant, Eolo. This month, thanks to a $110 million investment, 22 wind turbines will officially begin operation, providing an additional 44MW of energy to the national network. It is estimated that Eolo will not require any fossil fuel supply.

  • Kalelo

    “In 2006, this scenario led the Nicaraguan government to address the need to change its electrical grid. With the government’s openness toward private investment, 58% of the country’s energy is currently produced by renewable sources whereas the remaining 42% comes from oil-based bunker fuel, according to estimates of the Nicaraguan Ministry of Energy and Mines (MEM). ”

    1– The “change” has been nothing but an inefficient corrupt filled game of cat and mouse
    2- government openness = Ortega owns part of the energy industry, whose government is heavily indebted to
    3 — we still have the most expensive kw/h in the region despite all of this
    4– even we produce more renewable energy, our “special relationship” with venezuela oil means we will continue to use venezuela oil even though it is expensive and non renewable

  • Bunky Hall

    I am a Canadian electrician and electrical contractor. I have worked in Nicaragua and I am certain that a large part of the high cost of electricity is the result of widespread theft of electricity. I would hazard a guess that half of the electricity in Nicaragua is stolen. It’s so easy to tap into the power lines, bypassing a meter. Many, many Nicaraguans do it, residentially and commercially. Last year, I was hired to do electrical work in a market of a major Nicaraguan city, I was installing fluorescent fixtures above some stalls selling shoes. I was made aware of two electrical feeders in the rat’s nest of wires running above and through the market; one feeder metered, the other not.
    Because of a lack of standards, inspections, enforcement and workmanship, many electrical services, particularly residential ones in the suburbs of Nicaraguan cities are so haywire as to be an open invitation to theft of electricity. The math is simple. If it costs 12 cents per kilowatt-hour to generate, distribute and administer the electricity in Nicaragua and half of the consumers are getting it for free, then the half that are paying for it must cough up 24 cents per kw-hr. to balance the books. This theft problem is independent of how the electricity is generated, whether it be geothermal or diesel generators. Investing in renewables will not necessarily reduce the cost of electricity in Nicaragua, not until the theft problem is dealt with. Union Fenosa probably didn’t know where to start with this one, what with so much corruption directing how the gears turn.
    In Canada and other more developed countries, electrical services must be constructed of conduits and enclosures such that any theft of electricity would be immediately obvious to the inspection authorities.

  • Pedro Arauz

    The Canadian gentleman who wrote above me is correct and the reason they steal the electricity is because they know most owners and all “suppliers” (Daniel Ortega) are common low life criminals and they apply the century old adagio of: “ladron que roba a ladron tiene 100 anos de perdon” they all know this and they all accepted.
    Thing is….the honest people who pay for their electricity usually come up one day and say: basta!
    Democracy is a byproduct of the ages and not a human decision provoked at diner while toasting with a fine wine, it has costed humanity plenty of blood, sweat and tears.

    • Ken

      You get to the heart of more problems in Nicaragua than electricity.

      The standard justification for theft, corruption, political shenanigans, and so on is that “everybody does it.”

      I have even gone so far as to explain if not completely excuse some of Ortega’s excesses by arguing that his opponents are as bad or worse. When others don’t play fair and you do, all that happens is you lose. And when you lose in politics, you don’t have the power to accomplish any good either.

      The question is how to stop this vicious cycle, and I disagree with those who maintain that it needs to be stopped at the top, i.e. with Ortega. This strikes me as a naive populism, since in the real world those vying for power against Ortega would simply exploit his new found honesty for their own gain, and the next regime would be as bad or worse.

      I think the US Ambassador had it right in a speech reprinted here not long ago when she urged everyone in Nicaragua, and in the context of her speech especially the business leaders, to assume their portion of the civic responsibility.

      Faulting the president for shady dealings with Venezuela and the like while stealing electricity yourself is not going to correct the problem. Everybody has to assume their portion of the civic responsibility.

      Right now the burden falls on the Sandinista legislators. If they have an ounce of integrity, they will stand up against the constitutional changes Ortega is trying to ram through and say “enough is enough.” If they lack this courage and integrity, you can’t very well fault Ortega. Indeed, you can assume that the next legislature can be as easily bought by another president as this one has been bought by Ortega, making it irrelevant which dictator is in charge.

      Everybody has to do this together, or it won’t happen.

  • car

    some valid points. but don’t forget neighborhood pricing. just about every service in nica is priced by area. live in a barrio and pay less than santo domingo or villa fontana. not sure about electricity but i will find out.

  • Pedro Arauz

    It’s a crescendo experience , freedom from self (dysfunction) will come.

    Detached from the day to day emotional grasp of the Nica and Latin situation, we are actually experiencing the downfall of the Chavez,Alba,Neo Comunists who pinched lake Maracaibo big time for their beloved US greenback or their God.

    Enjoy the process and thanks for your contribution!

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