How quickly can a nation wean itself from fossil fuels and move toward reliance on renewable energy? In the case of Nicaragua, it can move very, very fast.
So fast, in fact, that Nicaragua is drawing a parade of distinguished admirers coming to examine how the nation is radically changing its energy footprint with an aggressive goal of becoming a green energy powerhouse.
“This is a very impressive wind park,” United Nations Secretary-General Ban Ki-moon said July 29 on visiting windmills near this city on Lake Nicaragua. “Your country has vast potential of renewable energy resources – solar, wind, you have very strong, constant wind, and geothermal and hydro. You are quite lucky.”
Nearly as breathtaking as the speed at which Nicaragua has embraced private renewable energy plants is its emergence in less than a decade from an energy crisis of constant rotating blackouts.
Never miss a local story.
“We were facing power rationing of up to 12 hours a day,” recalled Lizeth Zuniga, executive director of the Renewable Energy Association of Nicaragua, a group representing private companies.
High global prices for oil had socked Nicaragua. So legislators passed a law in 2005 giving renewable energy companies a tax holiday and permitting them to import equipment and machinery free of duties.
“We were going to move from around 80 percent dependency on oil for our energy to around 80 percent dependency on renewables over the course of a 10-year period,” said Javier Chamorro, head of ProNicaragua, an export promotion agency.
What happened next surprised even the government. Private capital poured in. Wind parks mushroomed. Sugar producers built plants to turn sugarcane stalks into fuel. U.S. and Canadian companies explored heat reservoirs around volcanoes.
“Other countries evolved gradually. Nicaragua just leaped ahead,” Zuniga said.
“You have to wait till the moment is right, and that’s exactly what Nicaragua did,” added Arnaldo Vieira de Carvalho, lead energy specialist at the Inter-American Development Bank in Washington.
Nicaragua tapped its abundant geographical advantages. Set in the Central American isthmus, it’s on the Pacific Rim’s ring of fire. It is a land of steady winds, huge lakes, tropical sun and rumbling volcanoes.
“Nicaragua has 19 volcanoes. There’s a lot of heat down there,” said Lal Marandin, a French consultant on renewable energy based in Nicaragua.
Marandin said private companies, seeing the benefits of the new tax and equipment import enticements, pushed hard, and the leftist government of Sandinista President Daniel Ortega did not get in the way. Indeed, perhaps concerned over the nation’s reliance on Venezuelan oil, the Ortega government opened doors further.
“It’s energy independence, energy security, that drives this,” Marandin said.
When Luis Alberto Moreno, the president of the Inter-American Development Bank, came for a visit in June, he hailed Nicaragua’s “unprecedented energy transformation.”
Among the foreign companies that pledged or executed projects worth $1.5 billion was Ram Power, a geothermal company that trades on the Toronto Stock Exchange.
“They have made extraordinary headway,” said Steven Scott, Ram Power’s investor relations chief. “Nicaragua has been known for many years as the land of lake and fire, and that translates into hydro and geothermal.”
Ram Power took over an existing geothermal company and pumped $425 million into the plant, set between the Telica and Rota volcanoes outside the town of San Jacinto. It brought two huge Japanese-made turbines to handle the superheated steam circulating through pipes that penetrate subterranean heat reservoirs.
“It represents the single largest private investment in the history of the country. . . . We produce more than 10 percent of the energy needs of Nicaragua,” Scott said.
If the plant arrives at full capacity of 72 megawatts of electricity, Nicaragua will save itself the purchase of 889,551 barrels of fuel oil each year for its conventional power plants, said Antonio Duarte, general manager of the Ram Power subsidiary, Polaris Energy.
The savings, though, go far beyond the country’s balance sheet.
“The estimates are that at 72 megawatts we are saving 400,000 tons of CO2 emissions each year,” said Alejandro Arguello, the corporate development vice president.
“The whole point of geothermal is that it’s, like, zero footprint,” added Scott.
Nicaragua last year generated an average of 51 percent of its electricity from renewable sources, said Chamorro of ProNicaragua.
“Our goal is to reach 74 percent exactly by 2017 from renewable resources,” Chamorro said. “By 2020, we expect to achieve 90 percent renewable generation.”
In contrast, only 13 percent of electricity in the United States came from renewable energy sources last year, according to the U.S. Energy Information Administration, a division of the Department of Energy. The bulk came from coal (39 percent), natural gas (27 percent), nuclear (19 percent) and petroleum (1 percent).
Even as Nicaragua transforms its energy matrix, it is only tapping the surface of its potential in renewable energies, which experts calculate at 4,500 megawatts, mostly from hydro, geothermal and wind. That amount is more than eight times the energy Nicaragua currently generates and consumes – making it a future source of power for the needs of its neighbors.
“We want to export energy,” said Jose Adan Aguerri, head of the nation’s Superior Business Council, its largest private-sector group.
Central America boasts 1,115 miles of transmission lines in an interconnected power grid, but the market between countries remains minuscule.
If enough energy is generated for export, some may come from huge wind turbines. More than 100 windmills now spin along the western shores of Lake Nicaragua, the largest freshwater lake in Central America.
“The quality of the wind is one of the best in the world,” said Cesar Zamora, country representative for the Israeli firm IC Power, which operates two wind parks here. “It is not turbulent. It is constant and stable.”
Some 15 percent of Nicaragua’s energy needs now come from wind.
“I don’t see any other country of Latin America with that level of wind generation,” said Vieira, the development bank analyst.
Other sectors are moving quickly, though, including hydroelectricity and biomass. One hydroelectric company, MLR, is putting the finishing touches on an $18 million. 5-megawatt project near Matagalpa in northern Nicaragua.
Sergio Dayan Rios, president of the company, marveled at the gamut of some 20 renewable projects either finished or coming on line across the nation.
“You’ve been creating an investment snowball. Every year, there’s more and more investment,” Rios said, adding that new projects bring state-of-the-art science and components. “You can leapfrog technology, and that can be a game changer.”
Among those joining in are sugar and rum producers, who find that bagasse – the pulpy residue left after sugarcane extraction – is profitable as a fuel in biomass electricity plants. Two large bagasse plants have come on line, and two more are in the works, said Marandin, adding that as an energy source, “it’s going to overtake wind.”
Solar has been a laggard, but experts say investments are in the works.
“Solar is going to come to Central America very quickly and very strong,” said Zamora, the wind generation executive. “One (project) is extremely big, 100 megawatts of solar, in the Chinandega area.”
Chamorro said Nicaragua is a model for showing that a country can “change its generation matrix in such a dramatic fashion in such a short period of time.”
“I think that Nicaragua can and should serve as an example for different countries in the region and also around the world that this is achievable,” he added.