Very few countries in the world can boast of having an energy matrix powered almost entirely by renewable sources. And only one of them is a small Central American economy. Costa Rica has had up to 99% of its annual electricity generated with clean energy. Like Iceland, Norway and New Zealand, it stands out as an innovative territory in this area, with the difference that it is not a rich or developed country.
The case of Costa Rica shows how decades of public policies with a clear objective can reduce dependence on fossil fuels and provide energy autonomy. The path, however, has not been free of obstacles, and now climate change and a government that once again sets its sights on fossil fuels have brought Central Americans to a turning point.
According to the National Electricity Control Center, Costa Rica went from generating 99% renewable energy in 2021 to 98% in 2022 and is estimated to be between 92% and 95% in 2023. The reason for this significant decrease in last year is the drought, because 67% of the country’s renewable energy is generated from hydroelectric plants (the rest is divided between geothermal, biomass, wind and solar energy). The lack of precipitation, in a territory where the rainy season lasts approximately eight months, forced the resort to fossil fuels to start up the thermal plants.
One of the most complicated
“The year has been one of the most complicated in recent decades. We had, for example, the driest September in historical records and we also had May and July with record temperatures. Demand also grew by over 5%,” explains Roberto Quirós, electricity manager of the Costa Rican Electricity Institute (ICE), the state electrical and telecommunications services company.
In previous years, without the impediment of drought, Costa Rica not only powered millions of homes and tens of thousands of businesses with clean energy, but also enjoyed energy independence that allowed it to maintain rates with relatively stable prices and that did not were affected by global geopolitical phenomena, as happened with the increase in the price of energy as a result of the war in Ukraine in many nations still dependent on hydrocarbons.
From hydroelectric domain to wind impulse
Costa Rica’s relationship with renewable energy goes back a long way. In 1884, the capital, San José, became the third electrified city in the world, after New York and Paris. Since that time, hydroelectricity was used to generate energy, although for several decades energy generation remained in private hands. It was not until the fifties when it was nationalized with the creation of ICE.
Édgar Gutiérrez, former Minister of Environment and Energy (2014-2018) and retired professor at the University of Costa Rica, explains that, at the end of the forties, the junta that governed at that time – the country had just emerged from a civil war in 1948― agreed when creating the ICE, in 1949, and that it should take advantage of the abundant water sources to generate energy. “That made a big difference for the country. They are beginning to build hydroelectric plants and bring electricity to every corner,” says Gutiérrez.
Then, Costa Rica began to gradually diversify its energy production. “The great geothermal potential is experimented with and then, due to the issue of greenhouse gases, the ICE proposes developing wind energy,” says the former minister.
Increase in population
Over the years, the increase in population generated greater demand, which led ICE to open itself to the incorporation of private plants through concessions to cooperative companies. Since 2000, hundreds of projects related to the production and distribution of energy have been carried out, and wind energy projects mainly stand out. This has been key for the country to achieve its high levels of clean production.
A well-known success story is Coopesantos, a cooperative that manages a wind farm in the south of the province of San José. The general manager, Mario Solís, says that the company was born at a time when the country was in the midst of a “development process”, concentrated in urban areas, so its objective was to bring this progress to rural areas as well.
Now, Coopesantos provides energy to approximately 53,000 people in an area covering around 1,300 square kilometers. The general manager of the company highlights that this population, in addition to having clean energy, has stability in their rates that would be very difficult to maintain with energy powered by hydrocarbons. According to Solís, this helps families in times when the cost of living does not stop growing: “Between 2016 and 2023 rates fell in nominal prices, while the general cost of living for families in Costa Rica increased. by around 17%.”
Erick Rojas, vice president of the Chamber of Energy Distribution and Telecommunications Companies (Cedet), of which Coopesantos is a part, points out that energy prices in Costa Rica are now “cheaper than in Europe, the United States or the rest of Central America”, where Costa Rica also sells part of the energy it produces.
Drought, diversification and the shadow of hydrocarbons
The government of President Carlos Alvarado (2018-2022) promoted a bill to prohibit the exploitation of oil and natural gas in Costa Rican territory, but it was stalled in Congress. The current president, Rodrigo Chaves, has expressed interest in exploring the country’s natural gas reserves, although there are no studies to corroborate how large they are. An initiative like this would go in the opposite direction to decades of public policies that helped place Costa Rica as a benchmark in the environmental fight.
According to Carlos Rodríguez, twice Minister of Environment and Energy (between 2002-2006 and 2018-2020) and now executive president of the Global Environment Fund (GEF), Costa Rica’s good reputation It is a relatively recent phenomenon. The environmental fame of the Central American country began in the nineties – in fact, the Ministry of Environment and Energy was established in 1995 after having had other names or having been linked to other portfolios -, when the country positioned its achievements in environmental matters in organizations international. “This image was earned with consistency,” says Rodríguez, who has 25 years of experience in the ministry and was part of that entire process. The former minister highlights how this reputation even led former German Chancellor Angela Merkel to invite then-President Alvarado in 2019 to present her decarbonization plan.
“In the minds of the majority of energy ministers on this planet there is only oil, we will never reach the Paris Agreements if we have rich governments that have an energy minister thinking that oil is the way out of the crisis ”Rodriguez criticizes. A key point in Costa Rica’s trajectory, he says, was the decision for a single ministerial portfolio to handle both Environment and Energy, when most governments in the world divide these two areas: “Energy, mining, biodiversity, seas, water : we put it all together. That gave us much more favorable conditions than other countries to plan.”
And it is precisely that element, planning, in which Rodríguez considers that the country is weak. The president of the GEF attributes this to the continued commitment to large hydroelectric plants: “The plants are expensive, they are inefficient and they destroy nature and the lifestyles of farmers, above all. What we have to do is allow citizens to generate their own electricity with solar panels. “This is a future, self-consumption, not what is happening today.”
Need for a diversified matrix
Andrea Meza agrees with this, who replaced Rodríguez as Minister of Environment and Energy (2020-2022) and is now Deputy Executive Secretary of the United Nations Convention to Combat Desertification. “What we are experiencing this year with the drought and the hydroelectric plants shows us that we need a very diversified matrix,” he points out.
The ICE electricity manager, for his part, believes that the debate should not be “simplified”: “We cannot overinstall solar panels because that ultimately translates into rates.” For Quirós, a balance must be found. “Hydroelectric is very good in years we have a lot of water, solar is very good at times, so with these and other elements we have to seek the satisfaction of national demand,” he explains.
Quirós highlights that in a “very tough” year like 2023, the country will still manage to be among those with the greatest renewability in its electrical matrix. He predicts, however, a complicated near future: “2024 and probably 2025 are going to hurt us, but there are also reasons. We could have planned much better from the institutional perspective, making decisions that were not made before 2022. Now unfortunately we have to live with that.”
The need to diversify energy sources as an urgent measure is a position in which both former ministers and suppliers agree, but for Meza, planning must go further and take into account other areas in which Costa Rica is far behind, such as transport. According to research published in January 2023 by the Costa Rica Technological Institute, it is the third country in Latin America with the highest density of private vehicles – 231 cars per 1,000 inhabitants – and these consume 35% of the energy generated by fossil fuels.
The growing fleet of vehicles powered by fossil fuels, drought and dependence on hydroelectricity, as well as President Rodrigo Chaves’s experimentation with the exploitation of natural gas, are challenges for the trajectory of a country that has been waving the flag of environmentalism. Despite this, former Minister Meza – who received the Earthshot award for Costa Rica’s environmental leadership in 2021 – believes that the country has demonstrated in the past its ability to make great changes in times of crisis. He cites the historical example of how Costa Rica in the eighties barely had 30% forest cover due to the growth of the agricultural industry, but thanks to a series of public policies, today forests represent more than 52% of the national territory.
“For me, that is a very beautiful story, because if nothing had been done, the entire country would have been destroyed, but the vision was adjusted and a clear policy was applied and twenty years later you see the effects,” says Meza. Now, if Costa Rica wants to maintain this environmental leadership, it must once again test its capacity for transformation.