MANAGUA—Nicaragua hasn’t won too many development races over the years, but this Central American dark horse is quickly making its way to the head of the pack in the global green-energy marathon, according to renowned energy expert Daniel Kammen.
With the country’s unique combination of abundant natural resources, favorable investment incentives, and an aggressive government strategy to switch to low-carbon energy sources over the next five years, Nicaragua has suddenly found itself at the tip of the spear of the renewable energy revolution.
“Nicaragua, in a really unusual way, has it all,” says Dr. Kammen, a senior fellow at the U.S.-based Energy and Climate Partnership of the Americas and a 2007 Nobel Peace Prize winner for his role as coordinating lead author for the Intergovernmental Panel on Climate Change.
Kammen notes that Nicaragua’s geothermal resources alone are conservatively estimated to be around 1,000 megawatts, or 1 gigawatt of energy—that’s twice Nicaragua’s total demand for power. When the country includes wind power, biomass, hydroelectric and solar, Nicaragua could conceivably produce nine times more energy than it can consume—and all from low- or zero-carbon sources.
“Nicaragua is in a situation where it could set a goal, in a cost effective way, to produce 100% renewable energy,” Kammen told The Nicaragua Dispatch in an interview last week. “And from there, the country could then tackle the transport sector.”
If Nicaragua starts to produce abundant amounts of renewable energy, Kammen says, the country could feasibly begin to consider investing in electric buses for public transportation, turning one of the hemisphere’s most pathetic and backwards mass-transport systems into one of the world’s most modern. While that’s still several years down the road, the energy expert says technologies and markets for electric vehicles are evolving at a clip where it’s not unreasonable to think the timing might work out perfectly as Nicaragua make its switch from fossil fuels to green energy.
By 2016, Nicaragua hopes to generate 94% of its own electricity from renewable energy sources, and only burn enough oil to cover the remaining 6% of its demand, according to government plans. That switch to sustainable energy opens all sorts of possibilities for innovation, Kammen says.
“In three or four years from now, when the Nissan Leaf, the Coda from China, and the Tesla (from California) are further developed and become cost-effective electric vehicles, Nicaragua could start to talk about switching its fleet and turning off its imported petroleum for the transport sector,” Kammen says hopefully.
Making a switch to clean-energy transportation would require a lot of progressive planning and a willingness to chart a new path forward. No other country has been able to pull it off so far, mostly because of limitations to existing infrastructure and enormous market pressures to relegate electric car technology.
But in Nicaragua, a country that doesn’t have much infrastructure or market forces to reckon with, the possibilities for a sudden lead forward are intriguing, Kammen says. Plus, the fact that Nicaragua has been dancing to the beat of its own drummer for 200 years suggests the country probably wouldn’t hesitate to buck the global trend and do something different.
“I think there is a real interesting possibility that Nicaragua—and Cost Rica, too—could be a zero-carbon economy within a decade,” Kammen says.
‘An ideal laboratory’
Nicaragua’s goal of increasing energy access in the countryside from 50% to 70% to 90% over the next five years is, “Almost exactly on chart with what the UN came up with as a goal that is aggressive but doable,” Kammen says.
But the experts says what really makes Nicaragua an “ideal laboratory” for a renewable energy revolution is its favorable combination of political will, natural resources and strong economic incentives—perhaps the most important factor as far as investors are concerned.
The biggest incentive investors have is the Central American electricity grid, which means that local power generators will always have an attractive regional spot market that is much larger than Nicaragua’s domestic demand for energy. And that, Kammen says, marks a huge difference between Nicaragua and other developing countries that are also vying for energy-sector investment.
“The Central America grid is really critical because it means there is a bigger economic component that other places don’t have,” Kammen says. “A country like South Sudan also has strong interest in (expanding electrical coverage), but there is no grid that connects them to Uganda or Ethiopia, and there won’t be for long time, so the business opportunities there are much more reduced and that changes the picture dramatically.”
On the cutting edge of climate change adaption
As an impoverished, tropical country with a traditional agricultural economy, Nicaragua is—alas, alas—extremely vulnerable to the negative effects of climate change. Global risk-analysis group Maplecroft, of Great Britain, released a report this week ranking Nicaragua as one of the top 10 most-vulnerable countries in the world to natural disasters.
The Nicaraguan government recognizes the risks. Sandinista officials say climate change is already costing the country hundreds of millions of dollars a year in lost crops and disaster response.
“Since 2006, we are losing $200 million a year in lost agro-production due to climate change,” Dr. Paul Oquist, President Daniel Ortega’s private advisor for national development policies and the Sandinistas’ representative to world climate change forums, told The Nicaragua Dispatch in an interview last February. “That’s 9% of what’s been planted each year. So our development in Nicaragua is already being affected by climate change.”
On the bright side, Kammen says, Nicaragua’s extreme exposure to natural disasters makes the country—willingly or not—a “leading-edge adapter to climate change.” And while that is mostly an ugly process, it also puts Nicaragua at the head of the global pack for climate adaptation.
Ultimately, that’s better than bringing up the rear.
“The early adopters are much more important than their numbers suggest, because they define a new type of market,” Kammen says. “Nicaragua is not going to be number one abator of climate change, but it could become a leader in adaptation to climate change, because Nicaragua is very exposed to climate change in many ways.”