Small wind turbines have had limited success to date in Nicaragua, however certain regions of the country do have a world class wind resource and the first utility scale wind farms are now successfully in operation. This study evaluates the potential of small wind turbines in rural Nicaragua, taking into account critical factors at the local level, such as wind resource and environmental hazards, as well as the ability to pay for and skills required to operate and maintain a small wind system. It was found that although solar PV is much more competitive across the country as a whole, a small market does exist in the central highlands and Southwest of the country.