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The next 'revolution' for Nicaragua: energy independence

Oil dependent Nicaragua is battling high energy costs and trying to build a sustainable economy by focusing on wind, hydroelectric, and geothermal.

By Tim RogersContributor / February 7, 2012


Nicaragua may be rich in resources, with abundant rivers, lakes, volcanoes, and wind-swept plains, but it built its economy on being a gas-guzzler.  Now, the government is reevaluating its approach, trying to wean Nicaragua off its dependence on foreign oil and becoming a leader in sustainable development along the way.

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Renewable energy is not only nature-friendly; some believe it’s imperative to Nicaragua’s survival.  Oil accounts for 70 percent of the country’s power generation, which means the economy takes a kick every time international petroleum prices soar. And despite having the poorest economy in Central America, Nicaragua has the highest energy costs. Years of energy shortages debilitated the country, as its power grid aged and energy plants were unable to meet demand.  Daily power-rationing blackouts lasting 6-10 hours were the norm in 2006, but in 2007 things began to change when the Sandinista government, led by Daniel Ortega, returned to power.

Switching to renewable energy has become a linchpin in the Sandinistas' national development plan. 

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

Ortega worked with Nicaragua’s private sector and Venezuela’s Hugo Chávez to fix its immediate energy problem by installing an additional capacity of 343 megawatts of power – 41 percent more power than Nicaragua was producing five years ago.

That means that for the first time in more than a decade, Nicaragua is producing a comfortable surplus of energy.  But electricity costs remain high, and 80 percent of households receive an electricity subsidy, according to the government.  Electricity rates rose by another 9 percent on Jan. 5, forcing the government to petition for further funding from the Bolivarian Alternative for the Americas (ALBA) alliance, which consists of members like Venezuela and Cuba, to pay for continued subsidies.

The Sandinistas' focus on renewable energy will not only reduce dependence on foreign oil, but will help bring electrification, development and progress to the countryside.  Administration officials say it will do so in a way that protects the environment, by deterring deforestation and reducing harmful emissions.

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

Presidential adviser Paul Oquist, an academic and leading voice on Sandinista development policy, says that renewable energy policy is key to providing citizen security, labor stability, peace and development in the country.

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

The switch from black to green


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