San Jacinto Polaris Energy Nicaragua S.A. (PENSA, or the Company) owns the San Jacinto-Tizate geothermal concession covering a 40 km2 area near León, Nicaragua, that is estimated to have a geothermal resource of more than 200 MW capacity.  Since 2005, under the concession, PENSA has owned and operated 10MW generation capacity comprised of 2 x 5MW back-pressure turbines (B/P units).

The Company is in the process of expanding its operations by adding another 72MW of capacity through 2 x 36MW Fuji flash turbines supported by further steam resource development, after which the original less efficient B/P units will be decommissioned (the Project).  As is often the case with integrated (comprising both steam field and power plant) geothermal power plants, financing for the Project is being divided into phases to match the ramp up of geothermal development and the progress of construction.  For this project, financing for the Project is being divided in Phase I and Phase II that each correspond to 36MW addition of capacity to the Companys operations.  IFC has been asked to consider providing financing for Phase II.

The Project will utilize geothermal resources from a smaller area within the larger concession (Eastern Sector), which has been in development since the 1950s by various parties and is estimated to contain a geothermal resource sufficient for the Project.  The Company has been and will continue to sell its output to two utilities, both of which are subsidiaries of Union Fenosa, a large Spanish utility, under power purchase agreements (PPAs) whose term end in 2029.  The Company has deployed a group of the worlds leading contractors/suppliers to complement its own substantial in-house geothermal expertise: ThermaSource of the US in drilling, Construtora Queiroz Galvao of Brazil in construction, and Fuji Electric of Japan in turbine supply. Help lower Nicaraguas dependence on thermal power:  Currently, renewable sources account for less than 30% of Nicaraguas effective installed generation capacity.  The successful completion of the Project will provide clean, low-cost power generated from a renewable resource to meet close to 20% of current power demand and allow for the possible retirement of old, inefficient and expensive thermal capacity. 

Development of Nicaraguas geothermal resources: To address the countrys current energy challenges, the Government of Nicaragua (GON) has put forth a strategy to develop its domestic renewable energy resources, including geothermal power.  Successful completion of the first large-scale greenfield private sector-led geothermal projects in Nicaragua would contribute directly, as well as indirectly through demonstration effect, to this objective.

Climate change: The Project is expected to displace thermal power generation, hence reducing the regions carbon emissions by approximately 361,901 tCO2 per annum (after project emissions of 39,167 tCO2 per annum).

Supporting the financial sustainability of the power sector: The Project will reduce Nicaraguas wholesale energy prices and dependence on oil, supporting the power sectors path towards financial sustainability.

Cost Efficiency:  The Project will help lower the cost of electricity and therefore help support a lower cost structure for industries and consumers in Nicaragua.