Costa Rica Renewable Sources Law: Consumers will be able to generate their own energy
Costa Rica has allowed distributed generation for self-consumption, with incentives for generators.
Costa Rica has been recognized for its effectiveness in electricity production from renewable sources. In this regard, it must be acknowledged that, after six years of producing over 98% of electricity through clean sources, a significant step has been taken with the approval, in the first debate, of Bill 22.009, also known as the “Law for the Promotion and Regulation of Distributed Energy Resources from Renewable Sources.” This law aims to finally allow consumers to produce their own energy for self-sufficiency and the opportunity to sell any surplus.
For those unfamiliar with Costa Rica’s regulatory framework, the energy sector has fragmented regulations on electric generation, with the state, through the Costa Rican Electricity Institute (ICE), and eight distribution companies, along with private cogenerators, jointly providing the public electricity supply service.
Prior to the enactment of this legislation, Costa Rica had allowed distributed generation for self-consumption through regulations, providing generators with incentives of up to 49% on their electricity bills for surplus energy delivered to the distributor.
Opposition to these initiatives has primarily come from state institutions involved, claiming a supposed “impact on users without access to distributed generation systems and the undeniable increase in tariffs for the maintenance of existing infrastructure and the grid.”
However, the benefits of energy generation for “prosumers” (producer-consumers) must be emphasized. It is noteworthy that opponents who advocate for end-users have not shown the same determination to oppose the recently requested 20% increase in electricity tariffs by ICE.
The mentioned bill establishes, for the first time, the possibility of selling surplus energy delivered to distributors. It also considers new forms of self-consumption generation, including various renewable sources, and island generation modalities for generators that are completely autonomous and without selling surplus energy for those who, due to their equipment, do not deliver energy to the distributor but operate in parallel with the National Electric System.
The Public Services Regulatory Authority (Aresep) faces the challenge of creating technical regulations and establishing rates once the project is approved. These should promote distributed generation. Additionally, consideration must be given to the fact that the installation of these generation facilities requires a significant financial investment, making it important to factor in this parameter for the initiative to be profitable.
The existing regulation includes a barrier that will be eliminated with the entry into force of the mentioned law, namely the 15% limit of prosumers that could connect to a meter feeder per geographical area, limiting only a group of generators, according to the state’s own financial studies.
The technical study with simulation, “Technical Analysis of Distributed Generation in CNFL,” conducted in 2015 by specialists, concluded that the Electric System would not be significantly affected, with at most a 7-8% annual reduction in energy sales for this company if generation and a higher number of generators were promoted under this modality. Thus, it seems that, under this thesis, technical barriers should not be maintained unless impartial technical opinions specify otherwise.
The development and promotion of this type of electricity generation are not only an advantage for the country in achieving its environmental goals but could also lead to a reduction in electricity tariffs and raise awareness among consumers about the impact of their actions on the grid, promoting necessary energy savings.
The energy transition and new technologies cannot be ignored; it is a reality that in the coming years, the business will shift towards generation where consumers manage their own systems and contribute to energy generation. ICE has an opportunity to lead the effective implementation of distributed generation without requiring excessive tariff increases that would adversely affect end consumers.
Depending on the technical and legal regulations created after the approval of this bill, it would be possible to stimulate investment, similar to regulations in other countries, such as Spain. This could lead to the construction of real estate projects (residential or commercial) where developers incorporate these technologies in advance, making the purchase and maintenance of equipment more accessible.
Much remains to be done, but this is the beginning of a change that cannot be delayed.
