WSHPDR_2013_Final_Report-updated_version

institutions portray a robust system with 10
organizations providing green finance at an average
cost of 1.5 per cent to 28 per cent. 7
Legislation on small hydropower
The Nicaraguan Government has declared hydropower
development to be an important part of its energy
policy. A favourable legal framework and an attractive
incentive structure have been established for
hydropower plants with capacities below 5 MW. The
necessary environmental permits are obtained from
the Ministerio del Ambiente y los Recursos Naturales,
generation of licences from Instituto Nicaragüense de
Energía (INE), and water concessions from the
Ministerio de Fomento, Industria y Comercio (MIFIC). 8
Law 476 for the Promotion of Hydroelectric Sub sector
stipulates that hydropower schemes below 1 MW do
not need a water concession, instead producer will get
a permit for 15 years. 8 For schemes with capacities
between 1 MW and 5 MW, a simplified procedure
applies to obtain a water concession from MIFIC. Law
217 General Law of the Protection of Environment and
the Natural Resources stipulates that projects with
capacities below 5 MW do not need an environmental
impact assessement. 8
Barriers to small hydropower development
Difficulty in accessing finance because of the high
initial cost of projects, commercial finance is
needed for the long term. But in general, the
finance assistance is short-term and hence shows
high interest rates;
Requirements and costs for permits are the same
for large and small projects. The cost per MW for
small projects is very high; in addition, the
concession process is very slow, often lasting
several years;
Power purchase agreements are too short to
motivate small hydropower project development,
therefore it is difficult to take long-term
investment decisions.;
The approved fiscal incentives for hydropower
projects do not yet create a level playing field for
hydropower development in general compared to
thermal projects, since the latter continue to be
highly subsidized.
4. Ministerio de Energía y Minas (2009). I Foro
Pequeñas Centrales Hidroeléctricas en Nicaragua, 19
October. Available from
www.mem.gob.ni/index.php?s=1&idp=174&idt=2&id=
189.
5. Global Network on Energy for Sustainable
Development (n.d.). Nicaragua: Renewable Energy for
Rural Zones Programme. Available from
http://energy-access.gnesd.org/index.php?option=co
m_content&view=article&id=116:nicaragua-off-grid-ru
ral-electrification-project-perza&catid=3:projects&Ite
mid=24.
6. United Nations Development Programme (2003).
Desarrollo de la hidroelectricidad para usos
productivos en zonas fuera de red. Project
NoNIC/02/G31.
7. Bloomberg New Energy Finance and Multilateral
Investment Fund (2012). Climatescope 2012: Assessing
the Climate for Climate Investing in Latin America and
the Caribbean. New York. Available from
www5.iadb.org/mif/Climatescope/2012/img/content/
pdfs/eng/Climatescope2012-report.pdf.
8. Comision Nacional de Energía (2006). Nicaragua:
Policy Strategy for the Promotion of Renewable Energy:
Situation and Perspective of Hydroelectric Generation.
Available from
www.esmap.org/sites/esmap.org/files/Nicaragua_Poli
cy%20Strategy%20for%20the%20Promotion%20of%2
0RE_Yoo.pdf.
References
1. Central Intelligence Agency (2012). The World
Factbook. Available from
www.cia.gov/library/publications/the-world-factbook
2. Instituto Nigaragüense de Estudios Territoriales
(n.d.). Homepage. Managua. Available from
www.ineter.gob.ni/. Accessed December 2012.
3. Instituto Nicaragüense de Energía. Dirección
General de Electricidad (2011). Estadísticas anuales de
generación eléctrica bruta. Available from
www.ine.gob.ni/dge.html.
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