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
 
¶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