Evolution and Challenges of Nicaragua’s Energy Sector

Abstract

This essay analyzes the evolution of Nicaragua’s energy sector from 2008 to 2022, with a focus on the transition to renewable energy sources. Government policies and technological progress have significantly reduced the country’s dependence on fossil fuels, which accounted for over 70% of electricity generation in 2006. The creation of the Ministry of Energy and Mines in 2007 fostered diversification of the energy matrix, resulting in 60% of electricity being generated from renewable sources— primarily wind and hydro power—by 2022. Regarding energy consumption by sector, the residential sector remains the largest consumer, although its share fell from 47.6% in 2008 to 41.5% in 2022. The transport sector, by contrast, has seen steady growth due to the expansion of the fossil fuel-based vehicle fleet. Biomass, especially firewood, continues to be a key component of primary energy production, particularly in rural households. Despite these advances, challenges persist, such as the high dependence on firewood and the dominance of fossil fuels in transport. Nicaragua aims to generate 90% of its electricity from renewable sources by 2027.