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Nicaragua Geothermal Energy Market Overview Nicaragua Geothermal Energy Market Overview April 2021 Nicaragua Geothermal Energy Market Overview Nicaragua Geothermal Energy Market Overview April 2021 Key Facts • Current installed geothermal power generation capacity of 109 MW (as of Abstract: April 2021) • The two geothermal The presence of active volcanic activity along the Pacific coast means Nicaragua is endowed with a substantial geothermal plants are operated potential estimated at around 1,500 MWe. Geothermal power by private entities generation began in 1983 with the startup of the Momotom- bo power plant when the first 35 MWe unit was installed to • Geothermal resource operate and a second unit of 35 MW was installed in 1989. A potential is estimated Geothermal Master Plan was prepared in 2001 that permits classification of the recognised geothermal areas in terms of at around 1,500 MW development potential and planning of the successive stages of exploration and development in order to achieve the goal of • The largest plant orderly and efficient development of the geothermal resources is the San Jacinto- of Nicaragua. In 2004, the first energy policy for the country Tizate plant with an was passed by the president of Nicaragua, with a principal installed capacity of objective of developing Nicaragua’s energy sector, with the main focus on renewables. The approval of Nicaraguan’s geo- 72 MW thermal law (established in 2002) and energy policies put the foundations to attract local and foreign private investment in • Additional capacity geothermal projects. The best strategy to structurally reduce planned or on the and stabilize national electricity tariffs is transforming the drawing board for electric mix toward 100% renewable prioritising the explora- 180 MW tion of existing wind, geothermal, biomass, and hydro in the medium-long term period. 1 Nicaragua Geothermal Energy Market Overview Country Overview Central American Nicaragua has a population of 6.5 million in- habitants and a size of 130,385 km2. Honduras is located to the northwest, the Caribbean to the east, Costa Rica to the south, and the Pacific Ocean to the south- west. In 2019, the Gross Domestic Product (GDP) in Nicaragua was USD 12.52 billion US dollars. As of 2017, the electricity generation in Nicaragua, was 1,980 GWh from fossil fuels including coal, natural gas, and oil; 730 GWh from wind, 20 GWh from solar , 400 GWh resources which experiences powerful winds and large amounts of sun- from hydro, and 700 GWh from light on a regular basis as well as the home to several volcanoes which geothermal sources. Currently all is a reliable source of geothermal energy. The second reason for turning geothermal and biomass power to renewable energy resources is to become energy independent. While stations are privately owned. The the country still imports foreign oil, the increased production of renew- thermal and hydropower plants of able energy, like geothermal energy from Nicaragua’s volcanoes, has the country are owned and operat- reduced that dependency. Based on the 2020 energy report, biofuel is ed by state companies. the main source of renewable energy produced in Nicaragua, account- ing for 33.2% of the renewable energy production. The second most used form of renewable energy is geothermal, which comes in at 24.6%, The Country‘s followed by wind energy at 22.5%. The least used forms of renewable Energy energy are solar energy at 0.5% and hydroelectric energy at 0.25%. Market Geothermal resources and In Nicaragua the share of re- potential newable energy in electricity generation has been increasing According to the Geothermal Master Plan completed in 2001, the in recent times. Nicaragua has an estimated geothermal potential of the country is 1,519 MWe. The Geo- installed renewable energy power thermal Master Plan identifies 12 geothermal areas of interest located generation capacity of 5,800 MW. along the protected areas of Los Maribios pacific Volcanic mountain The increase in renewable energy range. Cosiguina Volcano, Casita-San Cristóbal Volcano, Telica-El Ñajo sources is due to the government’s Volcano, San Jacinto-Tizate, El Hoyo-Monte Galán, Momotombo Volcano, plans to transform and diversify Managua-Chiltepe, Tipitapa, Masaya-Granada-Nandaime and the Island the energy sector. Reaching a 91% of Ometepe are the evaluated geothermal areas of interest. Two geother- renewable share of electricity mal fields, Momotombo and San Jacinto-Tizate are currently in opera- generation by 2027 is the ambi- tion. The El Hoyo-Monte Galán, Managua-Chiltepe and Volcán Casita-San tious goal of the government for Cristóbal geothermal fields are licensed to private companies to carry two reasons. One, is the country’s out geoscientific exploration investigations. The remaining resources natural abundance of renewable have not been licenced yet. 2 Nicaragua Geothermal Energy Market Overview exploration well was drilled in 1974. The first generating unit of 35 MW became operational in 1983 and a second unit of 35 MW was installed in 1989 which brought the total capacity to 70 MW. Although Enel signed in 1999, a Joint Venture with the company Ormat lasting fifteen years, the contract ended in June 2014. The plant is currently operated by Ormat. An additional binary cycle power plant with a capacity of 7 MW was installed and put into operation in 2003. The current operating capacity is 31 MW. The 72 MW San Jacinto-Tizate geothermal plant by Polaris Infra- structure is located in northwest- ern Nicaragua (i.e Cordillera de los Maribios). It was the second field Regulatory framework developed in the country and has energy market, geothermal market & development been the most active project since 2013. Exploratory investigations Nicaragua’s geothermal development is mostly based on a cost-sharing and deep drilling in the spot car- approach despite initially being public sector-led. Although transmis- ried out during the years 1992-1995 sion is owned and operated by the state-owned company ENATREL, by the company INTERGEOTERM, generation and distribution electricity in Nicaragua are open to pri- SA. The field began to be exploited vate-sector participation. Geothermal concessions have been awarded and operated with two wellhead to different private companies since the publication of the Geothermal turbines with a capacity of 2x 5 Master Plan Study in 2001, and the publication of the Geothermal MWe back pressure units which Resources Act (Law 443) in 2002. The Geothermal Resources Act was were integrated into the National amended three times (i.e in 2006, 2008 and 2010). In the amendment Interconnected System (SIN) since from 2006 (Law 594), some environmental aspects that concession 2005. The company Polaris Energy holders must manage, in cases where an area under investigation for of Nicaragua (Polaris Infrastruc- exploration or production is located totally or partially in protected ture) has the development license areas, were included. The act states that, before initiating exploration of the field with a duration of twen- or utilisation activities, the license holders must obtain the approval in ty-five years. the Environmental Impact Study and an Environmental Permit from the Ministry of Environment and Natural Resources (MARENA). Geothermal Geothermal Energy Market & Utilisation today Industry Geothermal energy utilization in Nicaragua is mainly for electricity gen- The regulatory entities for the eration. Even though utilisation of geothermal resources started in 1983, electricity sector in Nicaragua are; the first Geothermal investigation studies in Nicaragua began in 1950s The Ministry of Energy and Mines at Momotombo geothermal field, located 40 km northwest of the city of (MEM), which is in charge of Managua. This field is the most studied among the geothermal areas of producing the development strat- Nicaragua. The first research was conducted in 1966 and the first deep egies for the national electricity 3 Nicaragua Geothermal Energy Market Overview sector, the Nicaraguan Energy Institute (INE) which drilling of small diameter wells, carried out to date is in charge of regulation and taxation, the Regional in the Chiltepe Peninsula. It is estimated that the Commission for Electric Interconnection (CRIE) is the geothermal fluids could generate 150 MW per 30 regulatory body for the Regional Electricity Market years. Despite GEONICA company obtaining the (MER) created by the 1996 Framework Treaty for geothermal exploration concession during the peri- the Electricity Market in Central America and the od of 2007-2010, currently the ALBANISA company National Dispatch Center (CNDC) which is in charge has the concession to carry out new exploration of administering the Wholesale Electricity Market studies of the Managua-Chiltepe geothermal field. (MEN) and the National Interconnected System (SIN). No further geothermal fields have been licensed yet and waiting for a bid in spite of pre-feasibility activ- ities to be done. Cosigüina Volcano, Telica-El Najo, Current Project Tipitapa, Masaya-Granada-Nandaime and Ometepe Island are among the areas yet to be concessioned. Development Polaris Infrastructure has announced a planned 7-10 MW expansion of the San Jacinto-Tizate geo- Development of geothermal is underway in differ- thermal plant. ent areas of the country. Through an International Public Bid, the GEONICA company obtained con- cessions to carry out geothermal exploration at El Outlook Hoyo-Monte Galán field. Deep exploration investi- gations began in 2009 and two commercial diame- In Nicaragua, total electricity consumption increas- ter wells were drilled. The data obtained revealed es an average of 6% per year. Due to the inflation of a promising situation for capacity of 200 MW in domestic consumption, industrial and commercial this geothermal field. Besides, a feasibility study is consumption; the government is on the track to currently in progress at the Casita - San Cristóbal build energy projects from renewables. The new Volcano geothermal field. The first reduced diam- electricity generation projects built between 2015 eter well was drilled in 2012 to a depth of 1,200 and 2027 modify Nicaragua’s energy generation metres which indicated the availability of good composition by reducing fossil fuel based energy quality steam for energy production.
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