Identifier
Created
Classification
Origin
09MANAGUA166
2009-02-12 18:57:00
UNCLASSIFIED
Embassy Managua
Cable title:  

NICARAGUA: CENTRAL AMERICA,S LARGEST WIND ENERGY PROJECT SET TO BEGIN OPERATION

Tags:  ENRG EINV ECON SENV NU 
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VZCZCXYZ0000
RR RUEHWEB

DE RUEHMU #0166/01 0431857
ZNR UUUUU ZZH
R 121857Z FEB 09
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 3749
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
UNCLAS MANAGUA 000166 

SIPDIS

E.O. 12958: N/A
TAGS: ENRG EINV ECON SENV NU
SUBJECT: NICARAGUA: CENTRAL AMERICA,S LARGEST WIND ENERGY PROJECT SET TO BEGIN OPERATION

UNCLAS MANAGUA 000166

SIPDIS

E.O. 12958: N/A
TAGS: ENRG EINV ECON SENV NU
SUBJECT: NICARAGUA: CENTRAL AMERICA,S LARGEST WIND ENERGY PROJECT SET TO BEGIN OPERATION


1. (U) SUMMARY: On February 6, Ambassador Callahan
accompanied officials from the American-Nicaraguan Chamber of
Commerce (AmCham) and the Federation of Nicaraguan Business
Associations (COSEP) to visit the Amayo wind power project,
which is expected to begin supplying the Nicaraguan
electricity grid by the end of this month. The Amayo project,
located near Rivas on the shores of Lake Nicaragua, is the
first wind power plant constructed in Nicaragua and is the
largest wind project in Central America. The project consists
of 19 wind turbine generators producing up to 40 megawatts of
energy, which at full capacity could produce 8% of
Nicaragua,s total annual energy needs. Amayo is 45% owned
by Arctas Energy Group of Houston. Arctas considers the
project location to have the best wind resource in Central
America, and is already proposing an expansion designed to
produce an additional 40 megawatts of power. End Summary.


2. (U) Ambassador Callahan joined AmCham officials Roger
Arteaga (President),Cesar Zamora (Director),and Avil
Ramirez (General Manager),and COSEP President Jose Adan
Aguerri on a visit to the newly-constructed Amayo wind power
project, slated to begin operation by the end of February.
The Amayo wind power project consists of 19 wind turbine
generators, each with a rated capacity to produce 2.1
megawatts of electric power. At its full capacity of 40
megawatts, Amayo will produce approximately 8% of
Nicaragua,s current energy needs. Amayo is the largest wind
project in Central America. The power it produces will
diversify Nicaragua,s energy matrix, which currently depends
on oil for 90% of its production.


3. (U) Ambassador Callahan was met at Amayo by officials of
the project,s two primary developers, Arctas Capital Group
of Houston and Centrans Energy Services, based in Guatemala.
Arctas Capital, founded by former executives of Enron Corp.,
specializes in developing energy infrastructure projects in
emerging markets. Centrans Energy has investments in shipping
and electricity generation, and is one of the earliest
developers of private power in Central America. Arctas and
Centrans are partners in another Nicaraguan energy plant, the
70 megawatt barge-mounted diesel engine generating plant in

the port of Corinto. The two companies each own 45% of the
Amayo wind project (Consorcio Eolico Amayo S.A. -- CEA),with
10% owned by ENISA (Energia Eolica de Nicaragua),a local
partner and the project originator. The total cost of Amayo
is nearly $100 million, 75% of which is financed by a
15-year, $71.25 million loan from the Central American Bank
for Economic Integration.


4. (U) The project developers gave Ambassador Callahan a tour
of the facility and the wind turbines. The project,s
location on the shores of Lake Nicaragua near Rivas allows it
to take advantage of one of the best wind resources on the
North American continent. The location features an average
wind speed of 9 meters per second, with constant wind from
the lake and low turbulence. These factors should result in
an average price per kilowatt hour below the marginal cost of
oil-burning power plants in Nicaragua. The project includes a
substation and interconnection to an existing transmission
line that traverses the project site and runs to the Costa
Rican border. Amayo will supply 20 megawatts each, at an
initial price of $86.25/MWh, to the two Nicaraguan
subsidiaries of Union Fenosa that run the country,s
electricity distribution system. Amayo estimates that the
project will reduce Nicaragua,s import and consumption of
fuel for energy by up to 216,500 barrels per year, saving the
country from emitting approximately 122,000 tonnes of carbon
dioxide per year -- carbon credits that Nicaragua will
register with the UN Framework Convention on Climate Change.


5. (U) Nicaraguan government officials in the environmental,
energy, infrastructure, and economic regulatory agencies have
given broad support to the Amayo project. The Nicaraguan
Minister of Energy and Mines, Emilio Rappaccioli, has stated
that President Daniel Ortega will preside at the opening
ceremony. Local media coverage of the Amayo project has been
regular and positive.


6. (U) The Amayo Consortium (CEA) already has plans to expand
the project and is negotiating options for land adjacent to
the current site that would support an additional 40
megawatts of capacity. Were a bid extended quickly for an
expansion, CEA projects that it could benefit from economies
of scale provided by the current project and meet
weather-related construction deadlines to potentially install
new turbines within a year. The Nicaraguan Ministry of
Energy, however, is taking a wait-and-see approach to the
success of the project and the ability of the transmission
line to handle the additional load.


7. (U) COMMENT: The Amayo wind energy project represents the efficient development of green power resources, which are potentially abundant but largely untapped in Nicaragua. Nicaragua relies almost exclusively on fuel for its power production. The official opening of the project will be a positive development in an otherwise difficult period for Nicaragua. Although the technology is almost exclusively produced outside of the country, Amayo represents a significant foreign direct investment. While the project created over 200 jobs during its construction, it will provide little in the way of long-term local employment, although the addition of a new, reliable power source is a positive development for the broader economy. CEA wants to move forward with an expansion project, but it is unlikely that the Nicaraguan government will extend a new bid in time for CEA to act on it and begin construction this year.
CALLAHAN