By Lâl Marandin -- Founded in June of 2010, the Nicaraguan Association for Renewable Energy and the Environment, known as Renovables is a nonprofit organization whose mission is "to organize and strengthen Nicaraguan actors to expand a fair and efficient use of renewable energy in both the public and private sectors in Nicaragua”. Renovables’ vision is to create impact through projects, national and international partnerships, the development of public policy, dissemination of good practices, scientific research, public awareness and formal education for a sustainable energy future.
The ultimate goal of its 2015 Strategic plan is to promote the access, production, sustainability and of renewable energy in Nicaragua. Renovables proposes the following objectives in the short and medium term:
• Strengthen the working sector in renewable energy at the national level
• Position the organization at the national and international level
• Promote changes in Nicaraguan law and regulations to better incentivize renewable energy for domestic and corporate uses
• Create a project portfolio to involve all member organizations.
As of the fall of 2011, Renovables is comprised of more than 30 institutions that promote, support or implement clean energy project in Nicaragua, utilizing all possible sources of renewable energy: hydro, wind, solar, geothermal and biomass.
The association aims to contribute, in collaboration with the public and private sectors, to maximize the use of the country's renewable energy potential and to increase renewable energy’s contribution to the energy portolio, in alignment with the National Administration’s “National Energy Strategy”.
Renovables and carbon credits
In this context, the Renovables association began a process in 2011 of identifying alternatives to carbon markets where Nicaragua is eligible so that local developers of renewable energy could take advantage of opportunities for additional income through the sale of Certified Emission Reductions (CER), that are issued on regulated or voluntary markets aiming at mitigating greenhouse gas emissions or sequestering carbon dioxide from the atmosphere. The mechanism has two main components: the creation of the credit through a certification program and the sale of the credit to a buyer on a credit market.
Renovables had been approached since its creation in 2010 by several actors of the carbon credit markets (Southpole, GIZ, HIVOS) but no deal was in sight.
The catalyzing role of blueEnergy
blueEnergy joined forces with two other Nicaraguan NGOs in 2009 to foster the creation and launch of Renovables, and was instrumental in its early growth. Being recognized for that action, blueEnergy was voted Secretary of the Board of Renovables at its inaugural assembly, an event that brought together more than 100 key people of the Renewable energy sector and over 50 institutions in June 2010. Taking this responsibility very seriously, blueEnergy appointed Lâl Marandin (blueEnergy co-founder and Managua Office Director) to support the growth of the young and promising association, and provide any needed support.
Forming a dynamic team with Renovables appointed Executive Director, Lizeth Zúniga (former country director of BUN-CA in Nicaragua), Lâl identified and negotiated a quick-win opportunity to utilize the Kyoto Protocol market through one specific clean development mechanism (CDM): the Program of Activities (PoA) Guacamaya, which was designed for small-scale hydroelectric projects.
This PoA is one of the two existing PoAs that have been developed for Nicaragua. The PoA structure is relatively new in the Kyoto Protocol proceedings, and is designed to group projects that use either several clean technologies in one given country, or the same technology in several countries. This new CDM structure was developed to allow smaller scale actors to take advantage of the complex Kyoto Protocol Market, through the sharing of registration and monitoring costs between the energy projects that join the Program.
How could Nicaragua take advantage of this opportunity? blueEnergy made this idea a reality in two ways:
1) by having established throughout the years a very complete database of actors and contacts, blueEnergy helped track down many current and potential project developers in the hydro sector, so that they could be presented with the program and decide to join.
2) by coordinating with several actors, and with the financial support of the ECNER project funded by the Common Fund for Governance in Nicaragua, blueEnergy made possible the organization of a workshop on “Carbon Credits for Nicaragua” under the leadership of Renovables and EcoRessources in Managua on August 3rd, 2011.
The event clearly highlighted for the public the general gaps and opportunities on the CER topic in Nicaragua, and created the conditions to present and explain the PoA Guacamaya’s specific requirements and benefits. It also helped identify other options for other types of power generation, through the Kyoto Protocol market or Carbon voluntary markets. More than 50 key actors were in attendance, including project owners and developers, actors from the Renewable Energy Sector in Nicaragua and government officials.
Left to right: Marlyng Buitrago, President of Renovables. Patricia Rosenthal, representative of
MABANAFT, Gianluca Merlo, EcoRessources; Christian Giles, Anaconda Carbon
Renovables’s strategic agreement with EcoRessources
As part of its contribution to the development of clean energy in Nicaragua, with the aim of exploring opportunities to enter the regulated carbon market under the Kyoto Protocol, Renovables signed a very important framework partnership agreement in July 2011 with the owners of the PoA, to allow Nicaragua to join the program. By doing so, it automatically allowed Nicaragua to benefit from the Kyoto mechanism for certification of emissions credits for the small-scale hydro sector for the next 28 years, when this door was closing for good: the Kyoto Protocol will indeed be terminated in December of 2012, with no clear vision of what comes next.
Also importantly, the agreement signed by Renovables with EcoRessources and the owners of the PoA includes a percentage of any CER transaction made for Nicaragua to be donated back to Renovables, supporting the financial sustainability of the Association.
More information of the Guacamaya PoA :
The Guacamaya PoA was originally developed for Honduras, Costa Rica, and Guatemenla by Anaconda Carbon (a firm based in Honduras that works with companies and organizations to achieve their corporate social responsibility and sustainability goals and acts as the coordinating body for the program); Mabanaft (a private group of German origin founded in 1947 who is the buyer of credits) and EcoRessources, a Canadian company with representation in Nicaragua, developing offset projects and carbon credit management for emerging markets of voluntary compliance.
The ultimate goal of this agreement is to foster the identification and promotion of hydroelectric projects under 15 MW in Nicaragua.
The eligibility criteria for the Guacamaya PoA are:
• Small-scale hydroelectric projects (less than 15 MW, can also be applied to new repowering projects total power less than 15 MW)
• Must operate run-of-the-river with no more than a daily control reservoir, if any
• Must comply with laws and regulations of Nicaragua
• Must have a Power Purchase Agreement with the national network (PPA Power Purchase Agreement)
The strategic importance of opening the Guacamaya PoA to Nicaragua lies in the possibility of selling credits into the European carbon market after the end of 2012, when the Kyoto Market will close. The European market is guaranteed to exist for the next 10 years.
This program will allow small-scale projects generating carbon credits to access the carbon market with zero upfront costs by the project owners. It also offers an attractive purchase agreement (ERPA) with Mabanaft (cash flow guaranteed and an opportunity to benefit if the carbon market is on the rise), simplified compliance process, and the possibility of exchanging information with similar actors in Central America.
Anaconda Carbon and Mabanaft are currently in talks with financial institutions to use the ERPA as collateral for bank loans. All parties involved have strength, experience, local presence and financial backing.
It is important to note that the Guacamaya PoA has a validity of 28 years for the certification of CER credits. So any project may now register itself over the next 28 years, at the time it is launched, and produce CER credits that it can then sell on voluntary markets and on the European market for carbon credits, which will be active for at least the next 10 years.