It’s time for action, not words, on green energy, Nicaraguan finance minister Alberto Guevara has told Emerging Markets. For small countries in Central America and the Caribbean, diversifying away from expensive imported oil is becoming a do or die issue.
“The crisis is serious and getting worse”, Guevara said. “When we talk about green energy it is because we need alternatives now to address a dramatic situation,” Guevara told Emerging Markets.
Guevara was responding to an IDB report, Scenarios For Green Energy in the Americas. It needs to be followed up with specific mechanisms to source investment in green energy, he argues.
Nicaragua generates 80% of its energy with imported oil, which is putting a crippling burden on the budget. Oil imports sucked up more than 60% of the country’s export earnings of about $2.2 billion last year. And these costs are rising, with oil prices above $100 a barrel.
Nicaragua needs to produce an additional 700 megawatts (MW) of electricity in the final years of this decade, to meet demand and avoid a return to rationing – which up to December last year kept part of the country without energy for up to 12 hours daily.
Guevara said the cost of each MW – a little more than $2 million under the current structure using imported oil – is prohibitive
“We have no way to pay for this. We’re talking about nearly $1.5 billion, which is impossible for us,” he said. Nicaragua is the second poorest country in the hemisphere after Haiti. GDP was close to $6 billion last year. Guevara said Nicaragua has geothermal, wind and hydroelectric potential, but it needs to find mechanisms to attract investment. A government study estimates that Nicaragua has potential for producing 6,000 MW of geothermal energy from its 16 volcanoes.
“We have enormous potential, but we need investors. There is talk about this, but we need mechanisms to help us match investors with our projects.The IDB and other institutions could help with this” he said.
The IDB’s Scenarios report, which covers technology, investment in policy trends, was presented at a seminar in Miami on April 5. But Central American governments say there is little concrete actions in the area.
Bahamian finance minister Laing Zhivargo told the seminar: “The issues affecting us are beyond our control. We need to be pragmatic and not only talk idealistically about moving to different energy sources.”
Oil imports swallowed up more than half of the Bahamas’ $2.4 billion in export earnings last year, and the proportion is likely to be greater this year.
Commenting on the IDB’s study, Zhivargo said: “More important than policies, is following up on policies.” Guevara of Nicaragua said that Central American nations need to move ahead on their own regional plans, developing cross-border programmes that could produce energy from renewable sources.