President Daniel Ortega\u2019s son and advisor, Laureano Ortega Murillo, has said that the USD 92 million<\/a> San Isidro project marks the beginning<\/a> of new Chinese investments in the Central American country via a credit model. It follows another photovoltaic plant deal \u2013 El Hato<\/a> in Ciudad Dar\u00edo, also in Matagalpa \u2013 which will be built using a Chinese credit facility worth approximately USD 80 million. A third solar project worth a reported USD 70.5 million, in Masaya department, was announced<\/a> in early October.<\/p>\n\n\n\n The design, supply and building contract for all three plants \u2013 which will reportedly have a total capacity of 200 megawatts \u2013 has been awarded to China Communications Construction Company (CCCC), one of China\u2019s main state-owned construction firms, which has worked in more than 150<\/a> countries. The company\u2019s expansion into the country comes after Nicaragua became the fourth Central American country to sign up<\/a> to China\u2019s Belt and Road Initiative in 2022, with Honduras becoming the fifth in 2023.<\/p>\n\n\n\n According to the International Energy Agency<\/a>, Nicaragua supplies around 60% of its total energy from renewable sources, including wind, solar and geothermal, with biomass \u2013 an often contested<\/a> renewable \u2013 accounting for the largest share, at roughly 40% of total supply. \u201cChina has the best photovoltaic technologies in the world,\u201d Ortega Murillo said on announcing the projects. \u201cThis gives us a guarantee that the project will be carried out in the best way and will ensure its best performance.\u201d<\/p>\n\n\n\n Around 60%<\/a> of Nicaragua\u2019s total energy supply is drawn from renewable sources, with biomass (41.8%) accounting for the largest share of generation as of 2022. The remaining 40% is supplied by oil imports.<\/p>\n\n\n\n In the electricity sector, biofuels (20.4%) make up the largest share of renewable generation, followed by geothermal (15.7%), hydropower (14.9%) and wind (12.8%), also as of 2022. Solar accounted for just 0.6% of generation that year, while the remaining 35.5% was generated from oil.<\/p>\n\n\n\n Local NGOs report that nearly 20%<\/a> of Nicaragua\u2019s energy is lost due to poor connections and obsolete systems, while many informal connections drive up distribution costs. Furthermore, distributors pay the highest<\/a> energy prices in Central America, an expense that is ultimately passed on to consumers.<\/p>\n<\/div><\/div><\/div>\n\n\n\n The country recently agreed to elevate its relations with China \u2013 which controls nearly 80%<\/a> of the global solar energy supply chain \u2013 to the level of \u201cstrategic partnership\u201d. It follows Nicaragua\u2019s announcement<\/a> in 2021 that it had resumed relations with China, breaking off its ties with Taiwan, and boosted by official visits and talks between President Ortega and Chinese leader Xi Jinping.<\/p>\n\n\n\n Since April 2018<\/a>, Nicaragua has been facing a political and social crisis, punctuated by protests against Ortega\u2019s repressive government. The ensuing violence has caused 355 recorded deaths and led to a tightening of state control. Consequently, the arrival of these solar projects has raised familiar concerns among some analysts, over the practical impossibilities of transparently monitoring their environmental and social impacts. The human and environmental rights evaluations offered here are therefore based on experiences with previous, similar projects.<\/p>\n\n\n\n According to the government, the San Isidro plant will comprise 112,000<\/a> solar panels. On the condition of anonymity, sources tell Dialogue Earth that a similar area of land will be used for the El Hato plant. A private sector renewable energy expert (who like many in the country prefers to speak anonymously, for fear of government reprisals) told Dialogue Earth that building the two solar plants will require clearing approximately 200 hectares of forest.<\/p>\n\n\n\n Dialogue Earth asked Evan Ellis, a Latin America research professor at the US Army War College in Pennsylvania, about the Nicaraguan government\u2019s track record on energy project concessions. He laments: \u201cIn terms of community benefits, environmental impacts, social conflicts and other repercussions \u2013 especially in a regime that lacks transparency, strong democratic institutions and the rule of law \u2013 the result has been disastrous.\u201d<\/p>\n\n\n\n Dialogue Earth also spoke to Amaru Ruiz, president of the Fundaci\u00f3n del R\u00edo. This NGO was shut down in Nicaragua for reporting<\/a> on and criticising the government\u2019s environmental record. It now operates from Costa Rica. Based on the regime\u2019s usual approach to mining<\/a>, Ruiz asserts, \u201cthere is no environmental or social impact study that stops the government\u2019s interests.\u201d<\/p>\n\n\n\n Ruiz adds that \u201cthe government has a long history of violating the rights of Indigenous communities and repressing dissenting voices, and this case will sadly be no different.\u201d<\/p>\n\n\n\n Dialogue Earth attempted to speak to community leaders in Matagalpa, but they declined for fear of the consequences.<\/p>\n\n\n\n For more than a decade, the Nicaraguan government has generated incentives for foreign investment, harnessing the country\u2019s abundant<\/a> sunlight, wind and geothermal heat to bet<\/a> on renewable energy.<\/p>\n\n\n\n In 2009, Nicaragua experienced a boom in wind energy investments of around USD 300 million. Four major wind farms were constructed<\/a> in the south, on the strip of land between Lake Cocibolca and the Pacific Ocean. Funding was provided by a combination of domestic and international investors. For example, the Amayo wind farm was financed by a consortium of companies from Nicaragua, Guatemala and the US. This new wind energy region, which won praise<\/a> from the UN secretary-general during a 2014 visit, has since attracted small, hydroelectric \u201crun-of-river<\/a>\u201d projects, which take advantage of the natural channels of rivers.<\/p>\n\n\n\n The country went from 25%<\/a> of its energy mix coming from renewable sources in 2007 to around 50% in 2016. Although the country continues to import fossil fuels, renewable energy now represents the largest share of the national energy mix, at around 60% of supply.<\/p>\n\n\n\n One way Nicaragua propels this is by offering incentives<\/a> to both domestic and foreign investors in renewable energy, such as tax-free imports of capital goods, as well as tax exemptions on income and property. The private sector renewable energy expert elaborates: \u201cIt exempts renewable generation plants that are installed in the country from taxes. And for 10 years, they do not pay value-added tax; they do not pay income tax throughout the pre-investment, investment and a little bit of the operation phase.<\/p>\n\n\n\n \u201cThe projections<\/a> [of the government] are that, by 2035, solar energy will triple to 3%,\u201d the expert adds, although \u201cthe jewel we have is geothermal energy\u201d.<\/p>\n\n\n\n While solar energy is inconsistent by nature and low rainfall in recent years has dampened Nicaragua\u2019s hydroelectric potential, its extensive volcanic mountain range reliably powers the geothermal sector. The Maribios Range is part of the Pacific \u201cRing of Fire\u201d and contains several active volcanoes. The government estimates Nicaragua\u2019s geothermal potential to be 2,000 megawatts<\/a>.<\/p>\n\n\n\n Nicaragua\u2019s National Electric Transmission Company (Enatrel) seeks to transform the country\u2019s energy mix by focusing on renewable energy with its 2022-2037 expansion plan<\/a>. It is also strengthening the country\u2019s transmission system. A raft of new green projects will be added, with the goal of maintaining an electricity mix of 70% renewable sources and 30% non-renewable.<\/p>\n\n\n\n The plan recognises the impacts of climate change \u2013 such as drought and impacts on crops \u2013 particularly on hydropower and bioenergy.<\/p>\n\n\n\n \u201cThe potential of renewables is enormous and there is now greater access to sites, meaning that the access routes have improved,\u201d says the local expert.<\/p>\n\n\n\n However, the cost of electricity in Nicaragua is a challenge for households and businesses. Rates vary according to sector and have the potential to rise<\/a> due to complex tariff and cross-subsidy arrangements. According to a Forbes study that referenced 2018-2022 data, the price of energy in Nicaragua was USD 0.33<\/a> per kilowatt hour (kWh). This made Nicaraguan electricity the most expensive in the region: in El Salvador the price was USD 0.20 per kWh, while the lowest was USD 0.14 in Costa Rica.<\/p>\n\n\n\n A 2015 stud<\/a>y by the Economic Commission for Latin America and the Caribbean (ECLAC) said Nicaragua\u2019s energy costs suppress the competitiveness of its industries and the wellbeing of its citizens: higher rates limit access to essential services, increase production costs and hold back economic growth. Furthermore, in a country where poverty rates are still high, ECLAC said disproportionately high energy prices increase the financial burden on families, especially in rural areas.<\/p>\n\n\n\n According to the private sector renewable energy expert, \u201cthere is no direct or coherent relationship between the price of electricity and the income level of the population or companies.\u201d<\/p>\n\n\n\n Relations between China and Nicaragua have fluctuated for years. Ties established with Taiwan in 1930 were broken in favour of the People\u2019s Republic of China in 1985, during Ortega\u2019s first term as president. A diplomatic allegiance with Taiwan was re-established in 1990 by Nicaragua\u2019s then-president Violeta Barrios de Chamorro, until the switch back to China in 2021 under Ortega once more.<\/p>\n\n\n\n Since 2021\u2019s realignment with China, Ortega has referred<\/a> to the relationship as a \u201cChristmas gift\u201d \u2013 and the fruits of these efforts have quickly materialised<\/a>, in the shape of a free trade agreement (signed<\/a> in August 2023) and a \u201cstrategic partnership\u201d. Chinese companies soon announced investments for various Nicaraguan infrastructure projects worth approximately USD 850 million<\/a>. This includes a USD 399.6 million loan to build Punta Huete international airport<\/a> in the west, as well as investments in gas storage plants, trains, roads, a new commercial maritime route<\/a> and housing projects for disadvantaged communities.<\/p>\n\n\n\n \u201cThese solar projects are explained by China\u2019s industrial policy interests,\u201d says Margaret Myers, a director of the Asia and Latin America programme at the Inter-American Dialogue, a think-tank. The solar industry is one of three industries that China has \u201cprioritised\u201d, she adds, alongside lithium batteries and EV manufacturing, known together in China as \u201cthe new three<\/a>\u201d.<\/p>\n\n\n\nEnvironmental impact<\/h2>\n\n\n\n
Green electricity grows, but price stays high<\/h2>\n\n\n\n
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<\/div>Nicaragua\u2019s solar energy may triple by 2035, but the jewel we have is geothermal energy <\/blockquote>Anonymous private sector renewables expert<\/cite><\/div><\/div>\n\n\n\n
China and Nicaragua open new chapter<\/h2>\n\n\n\n
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