Selling Power to the Utility Grid in Nicaragua

Abstract

This paper will discuss the process of developing a long term power purchase agreement (PPA) with Union Fenosa, a Nicaraguan utility company. Since Union Fenosa is licensed as the sole electrical distributor in Nicaragua through the year 2030, it is important to understand both the framework behind energy system sales in Nicaragua and the legal framework under which Union Fenosa operates. In 2009 the Nicaraguan government signed a memorandum of understanding (MOU) with Union Fenosa which had the effect of improving both the financial and technical conditions for the energy sector. This paper will discuss (i) the background of Union Fenosa and the new legal framework they are now operating to create sustainability in the distribution and energy sector of the country; (ii) the market conditions in Nicaragua and the regulatory process that is involved in the sale of energy through the spot market and through PPAs, and (iii) an analysis from the developer’s point of view of the requirements that must be met to negotiate and implement a PPA with Union Fenosa. In particular we will highlight the experience of Ram Power, Corp. and its subsidiary PENSA, which has been selling power in Nicaragua since July, 2005 from the 10MW San Jacinto-Tizate concession located near the city of Leon, Nicaragua.