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Nicaragua to transform its energy matrix and expand access to electricity

Nicaragua has embarked on a historic program to transform its energy matrix and expand access to electricity among the poor with help from a $30.5 million concessional loan approved on July 7 by the Inter-American Development Bank.

The loan will contribute to an unprecedented multidonor program lead and coordinated by the IDB that will provide up to $381 million in loans and technical cooperation to Nicaragua. Also contributing to this program are the World Bank, International Finance Corporation, Spanish Agency for International Development Cooperation, the Korean Exim-bank, Latin America Investment Facility, European Investment Bank, Central American Bank for Economic Cooperation, Climate Investment Fund and the Nordic Development Fund.

Nicaragua’s National Sustainable Electrification and Renewable Energy Program (PNESER, for its initials in Spanish) will execute projects under the program over the next four years as part of a comprehensive strategy designed to transform the electricity sector. The overarching objectives will be to address Nicaragua’s lack of electricity in rural areas, insufficient transmission and grid infrastructure, systemic inefficiencies, high dependence on fossil fuels and lack of investment for renewable sources.

Specifically, PNESER will

  • expand the rural electrification to 117,000 new users (702,000 persons) in 3,666 communities;
  • normalize 164,000 households (984,000 persons) that currently have illegal electricity connections;
  • install 214 KM of new transmission lines for renewable sources of energy such as wind and geothermal;
  • support the installation of 2 million efficient bulbs in residential sector and 20,000 in the public sector as part of a National Energy Efficiency Program

Nicaragua, which has one of the lowest rates of electricity coverage in the region, is expected to increase the population with access to electricity from 65 percent currently to 85 percent its within 4 years, benefiting 1,7 million of habitants.

For Nicaragua, having a single comprehensive and well-coordinated energy program offers critical advantages over the traditional approach in which each donor funded separate projects.

According to the team leader, José Ramón Gómez, “ this project is an excellent example of cooperation among multilateral institutions and bilateral funds that will leverage public funds in the most effective way and result in a coherent program to advance renewable energy deployment in the developing world. Additionally such coordination reduces the overall administrative costs and allows a Government to deal with one instead of 10 different projects and a multitude of donors in the same sector”

In seeking to promote private sector investment in the large potential of renewable energy sources in Nicaragua, the program will also finance feasibility studies that could result in 358 MW of renewable energy.

Investments to improve the efficiency of the electricity transmission system are expected to save enough energy to meet the needs of all of the 1.7 million new electricity consumers. Nicaragua will be able to expand electricity coverage by 20 percent without increasing its overall electricity consumption.

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