The Inter-American Development Bank (IDB) will provide $103.4m of financial support to Nicaragua to boost its geothermal power potential and strengthen its power transmission system.
Out of the $103.4m, IDB will provide a loan of $51.4m while $25m will be provided by the Korean Infrastructure Development Co-financing Facility in Latin America and Caribbean and managed by the IDB.
The Clean Technology Fund (CTF) and Scaling Up Renewable Energy in Low Income Countries Program (SREP) will provide $17m and the remaining $10m will be sourced from local counterpart funds.
The Central American country produced about 50% of its energy from renewable resources in 2015, out of which the share of geothermal stood at 30%.
It is estimated that the country has potential to generate about 1.5GW of geothermal power, out of which only 10% is tapped by now.
The financing will support Nicaragua with site investigation that can determine the technical feasibility of exploiting geothermal potential in the Cosiguina field in the Northwestern region.
Part of the fund will also be used for activities such as commercial scale well explorations. It will help the country in attracting private investment into the geothermal sector.
Apart from this, the financial support will help Nicaragua in the development and construction of a reliable transmission infrastructure and electrical substations which will enhance power delivery.
It will help in meeting current demand and make the country ready for increased energy demands in future.
Improvement of energy infrastructure is part of the country’s plans to adjust to the regional energy transmission system, Central American Electrical Interconnection System (SIEPAC).
In the recent times, the country has been seeing a rise in demand for energy, which increased by 2.6% in 2014 and by 4.6% in 2015.