GEOTHERMAL ENERGY IN NICARAGUA Ministry Of Energy

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GEOTHERMAL ENERGY IN NICARAGUAMinistry of Energy and Mines1

Nicaragua Location: Strategically located inthe heart of the AmericasNaturalResources : Abundant.It has 7% of the world'sbiodiversity. The secondlargest rainforest in theAmericas(BosawásReserve, located Northeastof the country). Capital City:Managua Languages :Spanish (Official)English- Caribbean Coast6.51 million of inhabitants. Population:2

Energy Sector Net generation : 3,682.31 GWh Petroleum :2.171.705 GWh58.98% Eolic :328.29 GWh8.92% Co-Generationfrom sugar cane : 248.633 GWh6.75% Hydro:413.443 GWh11.23% Geothermal:520.237 GWh14.13%3

TRANSFORMATION MATRIX POWER GENERATION PERIOD: 2007‐2013.51 %41 %Year 2013Real Generation January‐September 2013Year 201228 %Year 2007Percentage evolution of thecontribution of renewableenergyinelectricitygeneration matrix: 2007‐2013.4

THE PARTICIPATION OF GEOTHERMAL ENERGY IN THE EVOLUTION OF THE MATRIX OFPOWER GENERATION.TOTAL PARTICIPATION OF ALL RENEWABLE ENERGY27.1%Eólicas,0.00%Biomasa , 6.8%Geotérmicas,9.8%31.9%Año 2006Year 2006Térmicas,72.9%Hidroeléctricas, 10.6%9.8%Bunker,70.7%Diesel,2.1%Biomasa, 6.1%Eólicas,5.9%Geotérmicas,7.3%50.78%Año 2011Año 2013Year ricas,12.6%7.3%71.94%Biomasa ,7%Hidroeléctricas,12%Eólicas,12%Year 2013Geotérmicas,14.13%Térmicas(Bunker Diesel),49%14.13%PARTICIPATION OF GEOTHERMALAño2017Year 2017Eólicas,Biomasa 12.8%, 5.5%Geotérmicas,18.8%Térmicas(Bunker Diesel),27.4%Hidroeléctricas,35.6%19%5

Actual Geothermal Development6

154 MW installed geothermal generation supplies12.06 % of country’s electric energy consumption!Geothermal projects in operation: Momotombo Geothermal Field San Jacinto-Tizate Geothermal FieldMomotombo Geothermal Field: PHASE I: 35 MW FT Condensing Unit- 1983 PHASE II: 35 MW FT Condensing Unit- 1989 Binary Plant: 8 MW Total Installed capacity: 78 MW Five Wells to drillSan Jacinto Geothermal Field: PHASE I : 36 MW Fuji Condensing UnitJanuary 2012 PHASE II: 36 MW Fuji Condensing UnitDecember 2012 Total Installed capacity: 72 MW 4 wells to be drilled to recover the generatingcapacity7

Other projects in development:Casita-San Cristóbal GeothermalProject: Exploitation Concession PHASE I: 4 Wells to drill (In the second half of2014)Managua-Chiltepe GeothermalField: Exploration Concession PHASE I : 3 Wells to drill (In the second half of2014).8

Exploratory Drilling Results (Projects under exploitation)Momotombo‐Geothermal Field21 unsuccessful well9 wells quenced in flow7 wells for reinjection11 wells in production2 km2Total: 48 Wells drilled% Successful drilling: 56 %9

Exploratory Drilling Results ((Projects under exploitation)San Jacinto Geothermal Field7 unsuccessful well3 wells for reinjection12 wells in productionTotal: 22 Wells drilledSuccessful drilling: 68 %10

Exploratory Drilling Results (Projects under exploration)El Hoyo‐Monte Galán2 unsuccessful well(Commercial Diameter)2 unsuccessful well (Slimhole)Success rate: 0%11

Exploratory Drilling Results (Projects under exploration)Casita‐San CristóbalCasita-San Cristóbal GeothermalProjectThe First Welldrilled wassuccessful (Slimhole)This Well hasgoodpermeabilityandtemperature12

Aspects that did not work in the drilling of geothermal wellsin NicaraguagMomotombo Geothermal Field: The geothermal field was over‐exploited during many years.Producing wells are very close to each otherSeparate waters were not totally reinjected for many yearsThe shallow reservoir was depressurized allowing entry ofnaturally cold front located in the southeastern part of thefield affecting a large number of producing wells13

Distribution of wells in MomotomboProductionzoneReinjectionzoneCooling zone1995-19982008

Aspects that did not work in the drilling of geothermal wellsin NicaraguagEl Hoyo‐Monte Galán Area:The Investor should start drilling slim holes, then continuedrilling with commercial diameter wells and avoid a higher riskinvestment.Investment costs were US 20 millionThe ratio of costs of a Slim hole is 6 to 10% compared to acommercial diameter well15

Aspects that worked best in geothermal drillingin NicaraguagCasita‐ San Cristobal Geothermal Project The Investor began drilling slim holes , which was successful. By upgrading Geothermal Model Casita‐San Cristóbal, they willcontinue drilling with commercial diameter wells.Well drilled in 2012: SuccessfulPreliminary Potential Estimated: 79 MW in an area of 3.5 square kilometersConcessionaire: Cerro Colorado Power16

GEOTHERMAL POTENTIAL MAP, NICARAGUA MASTER PLAN 2001Cosigüina VolcanoCasita VolcanoSan Jacinto VolcanoMombacho VolcanoTelica VolcanoEl Hoyo VolcanoMomotombo VolcanoChiltepe PeninsulaApoyo lagoonOmetepe Island

Nicaragua has a great Geothermal potential (1519Mw).However, despite having eight areas available forprivate investment, the process should be faster andnot take a long time For what? High risk of development of the resource. Financial obstacles by the high initial investment.18

ELEMENTS THAT HELP FURTHER GEOTHERMALDEVELOPMENT TO THE FUTUREGeothermal development is accompanied by the risk of finding theGeothermal Resource.These risks decrease with the progress of the Project. However, even afterthe Central building is still some risk during the operation stage.Well drilled in 2012: SuccessfulPreliminary Potential Estimated: 79 MW in an area of 3.5 square kilometersConcessionaire: Cerro Colorado Power19

Conclusions The development of geothermal energy requires a long time for their completion,from initial survey to commissioning of the Plant. The high initial investment is necessary during this time. The Return on Investment begins only when the Central enters commercialoperation. During the period of gestation the investor has to face high risks and payment ofinterest on money already invested. Low financial costs play an important role. It is important to find a mechanism that our government takes initial investmentrisks and thus be able to attract private investment. The Government of Nicaragua has taken the initiative with Cosiguina VolcanoGeothermal Area to invest 3.8 million to bring the current Recognition Stage toPre‐Feasibility stage (Area Studies and the drilling of three wells Slim holes)Cosigüina Volcano20

POWER SECTOR: Nicaragua in 3rd place after Brazil and Chile, with market Clean Energy attractive, list of26 countries of Latin America and the Caribbean.1st Place in "Enabling Environment" and "Investment and Financing for Clean Energy"Fuente: Ministerio de Energía y Minas2121

GEOTHERMAL PROJECT IMPACT (2013‐2017)PROJECTS YEAR 2013PROJECTED ANNUAL ENERGYGENERATION (MWh)SAN JACINTO ‐TIZATEREPLACEMENT FUEL (FUEL OIL)THOUSAND BARRELSMILLION (U.S. L (1)817,8341242.83136.54PROJECTSYEAR 2017PROJECTED ANNUAL ENERGYGENERATION (MWh)VOLCAN CASITA FASE ITOTAL (2)REPLACEMENT FUEL (FUEL OIL)THOUSAND BARRELSMILLION (U.S. )260,600396.0043.601,078,4341638.83180.14PETROLEUM SAVINGS FOR NICARAGUA22

THANK YOU FOR YOUR ATTENTIONMario González Barbosa mario.gonzalez@mem.gob.ni23

154 MW installed geothermal generation supplies 12.06 % of country’s electric energy consumption! Geothermal projects in operation: Momotombo Geothermal Field San Jacinto-Tizate Geothermal Field Momotombo Geothermal Field: PHASE I: 35 MW FT Condensing Unit- 1983 PH

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