What does it feel like having electricity for the first time?  Idalia Cordoba (see picture) puts it like this.  ‘When you regularly have to get up at 3.00 in the morning, more than two hours before dawn, and poke around looking for things with a little torch, you could be sure that the batteries would pack in just when you most needed some light.  Now we have it at a flick of a switch.’

Idalia’s family is one of twenty who are getting electricity in a project financed by New Leaf, a British housing association.  She lives in a place called El Arenal, a flat, isolated area near the northern end of Lake Nicaragua.  Even though there are two major towns not far away, getting to either takes an hour in a 4×4 vehicle, and for weeks on end in the recent rainy season the roads were impassable except on foot, or by horse or ox-cart.  This certainly accounts for the lack of electricity, as the Spanish company which has owned the country’s distribution system since 2000 has made little progress in connecting rural areas and more than half the population still has no access to the grid.

But neither does Idalia.  Her electricity comes instead from a small, 38 watt solar panel mounted on a steel pole next to her house.  (It couldn’t go on the roof, its condition is too poor.)  The panel supplies a battery which powers two light bulbs and a socket.  She now has enough light for her children to do their homework in the evening, as well as to start her chores in the early hours of the following day.  Although it had to be brought in on the ox-cart, installation of the equipment took only a few hours.  And this simple system is more reliable than the normal supply – power cuts and rationing are common, even in the major cities.

The cost of around $600 will be repaid over six years.  This is not much more than she would pay for energy from the grid, were it available, and of course after three years the system will be hers and she should get many more years use from it even if she has to replace the battery.  The panel itself should last at least 20 years.

Solar energy is still relatively expensive, but if the capital cost can be spread through soft loans it can be an attractive option in a place like Nicaragua where electricity prices are high and the privatised system is unreliable.  Despite promises when the state electricity company was sold off, prices are the highest in Central America, and consumers the poorest.  Nicaragua’s electricity is twice as expensive as in neighbouring Costa Rica, yet average incomes there are six times those in Nicaragua, and practically all of Costa Rica’s rural population has mains electricity.

Apart from privatisation, a major factor in rising prices is Nicaragua’s dependence on oil.  Costa Rica has been investing in renewable energy sources, and has reduced its use of oil for electricity generation to only 20 per cent of total supply.  Nicaragua, meanwhile, has made no major new investment in alternative generating capacity, and is struggling to maintain what it has.  So despite an abundance of potential sources such as geothermal and hydro – as well as solar – power, its dependency on oil to produce electricity is well over 70 per cent.

Like many small countries, Nicaragua has been hard hit by escalating oil prices.  The national bank estimates that the bill for oil imports will be 44 per cent higher this year than last, dwarfing the modest growth in the country’s exports and in the remittances that Nicaraguans receive from abroad (one of its biggest sources of income).  Even with such pressures, however, there has been no active promotion by government of renewable energy sources, only modest measures (like putting the clocks forward an hour) to save energy.

Consumers like Idalia are eager to try an alternative supply whose costs are known and whose control is in the family’s hands.  Small-scale options like solar and wind power have tremendous potential in a country where many people’s energy needs are modest and the costs of distributing energy outside the cities are high.  But investment is needed to reduce or spread the initial costs, to promote alternative power sources and develop the market so as to reduce prices.

Already, energy market experts are speculating that poor countries like Nicaragua, with tiny oil markets, may not be able to buy fuel at all if supply becomes limited in a future, even bigger, crisis than that of 2005.  Small countries urgently need a sustainable energy policy – in both senses of the word.  Investing in renewable systems not only makes sense environmentally but may provide the only sustainable sources of power in a volatile and unpredictable world energy market.