New Renewable Power Supply and Purchase Rules to Release $1.4 Billion Projects in Nicaragua and Ecuador

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Countries in Central America are taking a positive line on the ability of renewable energy sources to fill gaps in their future power needs and provide that power at rates competitive with thermoelectric sources. Most importantly they are developing legislation to accommodate the sale and supply of renewable energy into the general market pool.

Nicaragua is planning to bring 150 to 180 MW of renewable energy online by 2008, and 140 MW of which will be available in 2007, through investments totalling $185 million over a range of projects.

Construction has started on a three-stage geothermal project in the Managua department. Completion of the first 2 x 5 MW turbine stage is scheduled for the end of this year, and the second 10 MW stage for the end of 2006. The third stage of the project will see the addition of two 23 MW turbines by the end of 2006 or early in 2007. The Nicaraguan company, San Jacinto Power, is constructing the $100 million, 66 MW project.

Emce, a Honduran consortium, is developing a 30 to 50 MW hydroelectric project, for which the site will be announced shortly. The $40 million project is scheduled to be in operation by the end of 2006, or earlier.

Two wind projects, both of 20 MW capacity, are planned for operation by the end of 2005. Negotiations on finance and technical details are currently taking place with European wind energy companies, out of which packages of technology and finance are expected to emerge to initiate the start of the projects.

Investors have been waiting for the government to finalize regulations that would class the projects as 'non-dispatchable'. This classification would allow the projects to feed power generated into the grid system, without having a prior agreement with the system operator on the amount or delivery time of the power. These regulatory hurdles are expected to be cleared by the end of July. This will open the way for a number of companies who are interested in wind and run-of-river projects to move from the feasibility stage to the planning stage.

In Ecuador two planned major hydroelectric projects have been waiting for the passage of the draft bill on the energy sector in the National Congress that will guarantee payment for the electrical power the producing companies will sell to the distributors. The measure includes the creation of a $500 million fund that will certify payments to private investors in the power generation sector.

China's CMEC (National Machinery and Equipment Import and Export Corporation) has pledged, through a letter of intent signed in mid-June, to invest $500 million in the 560 MW El Reventador hydropower project.

The government's Production Secretary, Patricio Johnson, said that the administration's policy was to replace the country's current inefficient thermoelectric energy with medium and long-term hydroelectric projects, which would primarily reduce the cost of a kW hour.

He said that a total investment of $1.2 billion would be released by the passing of the law, which would include the $400 million Termoriente project, in addition to El Reventador and the Mazar and San Francisco projects. The construction of the first two projects will begin over the next two to three years.

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