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GTAP Resource #5555

"The Economic Case for Renewable Energy: a Recursive Dynamic Model Analysis for the Nicaraguan Economy"
by Cortes Selva, Alma

Central America has the highest penetration of non-large hydro renewable energy capacity installed in the Western Hemisphere (Bloomberg New Energy Finance and Multilateral Investment Fund 2014, Bloomberg New Energy Finance/Multilateral Investment Fund 2012, 2013, World Bank 2015a, 2015b), higher than the regional Latin American average of 14%, and on par with developed nations such as Denmark. Nicaragua is an especially interesting case, since it is making great progress toward more sustainable energy sources, going from 40% of its electricity from non-hydro renewable energy in 2013 to 50% of its generation coming from wind power alone in 2014 (CNDC 2014). Moreover, the country had a great dependence on oil related imports, accounting for 1/3 of total import bill of the country. The country has been able to reduce considerably the dependence on oil and has set very ambitious goals of reaching 90% of generation coming from renewable sources by 2020.

By using Mitigation, Adaptation and New Technologies Applied General Equilibrium (MANAGE) and the latest SAM of Nicaragua, as well as updated the energy matrix and the levelized cost of electricity (LCOE) that feeds MANAGE model on energy generation. The paper will elucidate some of the key macroeconomic aspects of Nicaragua’s energy plan, for example potentially short-run balance of payments constraints as Nicaragua invests in new (imported) renewable energy capacity, but long-term relief due to lower oil imports. Nicaragua’s potential output could exceed domestic capacity; thus an additional long-term benefit could be the potential to export surplus output. This potential could be limited if investments in cross-border transmission fails to materialize.

Resource Details (Export Citation) GTAP Keywords
Category: 2018 Conference Paper
Status: Published
By/In: Presented at the 21st Annual Conference on Global Economic Analysis, Cartagena, Colombia
Date: 2018
Created: Cortes Selva, A. (4/14/2018)
Updated: Cortes Selva, A. (4/14/2018)
Visits: 904
- Calibration and parameter estimation
- Dynamic modeling
- Climate impacts
- Central America

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