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SAN JOSE, Costa Rica – More than 100 government officials, policymakers, industry and civil society representatives met in San José on December 6 to consider Costa Rica’s energy future.

In an intense day of discussion hosted by the Institute of the Americas in collaboration with the Academia de Centroamérica, panelists and the overflow audience debated the outlook for Costa Rica’s energy sector, key trends and ideas aimed at revamping the national energy model.

Costa Rica is clearly in a unique energy position. Over 99% of the country is connected to the electric grid, and roughly 90% of power comes from renewable hydro-based sources.   At the same time, the state electric monopoly, the Costa Rican Electric Institute (I.C.E.) controls the national energy dialogue and process.  

Not surprisingly the appropriate role for the state in the electric sector provokes passionate debate.  Jack Liberman, coordinator of the electric committee of Costa Rica’s private sector umbrella organization UCCAEP advocated for a “new model for the electric sector.” The doubling of electric prices since 2003, Liberman said, demands a serious evaluation of the appropriate state-private sector balance in the nation’s energy matrix.

Others feel that the existing laws provide a useful framework that with some further tweaks is sufficient.

There are concerns over legal certainty, or “seguridad jurídica,” in the nation’s electric sector.  Many sector participants decry the current limitations on maximum contract value and contractual inflexibility.  But most worrisome, they note, is the current regulatory imprecision and the role of regulatory body ARESEP vis-à-vis power pricing given varying modalities stipulated in Laws 7200 and 7508. Efforts are required at the political level to provide confidence and precision to lift opportunities and investment in the sector.

Costa Rica’s economy has begun to recover from the 2008 recession and trends point to increased GDP growth which in turn leads to increased demand for electricity.

Policy makers and planners are now faced with balancing investment to assure the country has ample electric capacity to meet demand without being certain what demand will be five or 10 years in the future. Estimates vary with some placing electric investment requirements as high as $6.68 billion over 10 years.

Participants also discussed the role for wind, solar, biofuels and natural gas.

Wind’s true potential is unknown due to insufficient evaluation and infrequent project development opportunities. Jay Gallegos of Globeleq Mesoamerica Energy proposed wind energy bids to foster competition and boost price gains. Others highlighted the prospects for offshore wind development in the future.

Costa Rica’s largest energy vulnerability remains its dependency on imported petroleum products, utilized primarily in the nation’s transportation sector. As Energy Vice Minister Andrei Bourrouet stated, Costa Rica “needs a drastic change to the current culture of hydrocarbon consumption.”

Former Energy Minister Roberto Dobles suggested that Costa Rica must assess and develop its natural gas potential, especially for use in transportation. Domestically produced natural gas could replace imported fuel products and provide both energy and fiscal benefits.

Dobles and Sampo Suvisaari of Wärtsilä concurred that natural gas offers the possibility to convert existing thermal power infrastructure and emphasized that such firming capacity complements hydroelectric and wind power.