The country is committed to further improve its energy system by increasing the share of renewable energy in the energy mix. By 2030, renewables should represent 73% of total capacity installed. Nicaragua currently has five operational wind farms, four biomass plants, six hydro plants – of which three privately owned, two geothermal plants and one solar park.
In this dual ambition, private initiatives play an important role. One such initiative is the San Martin hydroelectric plant. This so-called run-of-the-river plant became operational in July 2019. Triodos Groenfonds and Belgian development bank Bio have financed the project.
Rodrigo Mantica is the CEO of Interamerican Hydroelectric Co., the co-owner and management company of San Martin Hydro. We sat down with Rodrigo to talk about his drive and entrepreneurship. Rodrigo started developing smaller hydro projects already in 2007. “Less than 20 years ago, my country depended for more than 80% on fossil fuels. We have brought that back to 50%, which is a great accomplishment, but this percentage is still too high. The financial and environmental costs of an energy system predominantly based on imported fossil fuels is simply too high for my country.”
“For me, it started with an article in a newspaper I read 12 years ago. At that time, the oil price was at a record high. The article called for a switch to renewable energy, to become less dependent on fossil fuel prices. It opened my eyes and the next day I was at the Ministry of Energy. A few years later, our company built the first privately-owned hydro plant Phantasma in Nicaragua. The rest is history, but at the same time also the future.”
Preparations for the project already began in 2009, whereas construction started in 2017. “Projects like these require very long and careful planning, because there are many risks involved, starting with all kinds of topographical, geological and environmental studies, to gaining the support of the local communities. Only when we have made sure that a certain area is suitable for building a hydro plant, only when we have gained full support from the local community and own the land upon which the plant is to be built, will we start designing and eventually building the plant.”
Apart from all the feasibility studies, the most important part of the preparations is securing support from the local community. “An important element, I believe, that helped us doing that is our ‘good neighbour’ policy. For us that means being fully transparent about our intentions and the pros and cons of the project. It also means offering fair prices for the land plots we need. For the local community, the biggest impact is the employment that construction of the plant and later on its maintenance brings. During construction 85% of the 340 staff came from the local community and now that we are operational, 15 out of the 18 maintenance crew are local.”
Another lasting benefit are the roads that needed to be built to access the area, that have made the region somewhat less remote and save the local people considerable traveling time. “Obviously, we also make sure that we replace the trees that we had to remove during the construction. We’re legally obliged to replant 6,000 new trees – 10 for every single one we cut down. In fact, we will plant around 20,000 new trees this year, and a total of 100,000 over the next five years, given that trees help absorbing carbon.”
“For me personally, another very important element of being a good neighbour is our involvement with the local schools. We make sure the schools in the vicinity have enough supplies, including for sports, and twice per year we give lectures about the importance of environmental protection. In general, we stimulate that kids go to school in the areas where we are active.”
San Martin Hydro
Inside the plant
Down by the river
Involvement with local schools
Planting 100,000 trees the next five years
Projects like these cannot be realised without funding from partners like Triodos Groenfonds and Bio. Rodrigo Mantica: “There is a clear need of long-term financing and the right pricing, for renewable energy projects to be considered as a potential development opportunity, and in order to make these projects bankable. The development of these projects is quite a long process and there are substantial risks involved in the development, construction, and operational phases; and local banks do not have the experience or are accustomed in Nicaragua to a project-finance model of finance which is required for these projects. Practically all new energy projects that have been developed in Nicaragua in the last 10 years, have been financed in most part by international development finance institutions.”
“Working with a partner like Triodos also makes sure and guarantees that the project is compliant with environmental and social aspects and thus gains recognition from that. The social responsibility that we both feel, is a strong alignment that makes our cooperation so much easier. I am more than motivated to develop other renewable energy projects and I hope that Triodos Groenfonds will continue to support me in that.”
San Martin Hydro
San Martin is a typical small-scale, 6 MW run-of-the-river hydro project: a dam of around 18 meters high captures water into a small lake; while maintaining an ecological flow in the original river bed, water gets deviated through a buried ‘penstock’ (steel pipe) to the turbine house 3 kilometres further downstream (and 82 meters lower), where it passes through the turbines and back into the river bed. The electricity generated by the connected generators - around 26 GWh/year, corresponding to the consumption of around 43,000 households, based on a monthly average use of 600 KWh - is delivered onto the grid through transmission lines that feed into the substation of the distribution company.
Generating clean energy, the hydro plant contributes to countering climate change by saving up to 20,000 tons of CO2 emissions per year. The energy it produces is a direct substitution for imported heavy fuel which is utilized in outdated plants; the project is the equivalent of 2,000 tons of oil-equivalent per annum. The project will also increase the reliability of energy supply by adding decentralized generation capacity to the system, facilitating distribution expansion in the poor and remote area where the project is located.
Are you looking for funding?Triodos Groenfonds provides long-term loans to renewable energy projects in developing markets and emerging economies.