Costa Rica has committed to becoming the world’s first carbon-neutral economy by 2021, with renewable energy playing an important role in that commitment. The country aims to have a 100% renewable energy (including large hydro) matrix by 2030. Already, large hydro is the main source of generation in the country, accounting for 53% of the 10.7TWh generated in 2015.
Costa Rica’s electricity market is controlled by state-owned Instituto Costarricense de Electricidad (ICE), a vertically integrated utility. The Costa Rican market includes cooperatives involved with generation and distribution in parts of the country and independent power producers selling electricity to ICE.
Costa Rica is part of the Central American Regional Market (Mercado Eléctrico Regional, MER), which interconnects seven countries in the region via the Central American Electrical System (SIEPAC). In 2015, unlike the previous year, Costa Rica had a surplus in the regional market, with 280MWh sold to the region and only 172.5MWh imported. Due to severe droughts, Costa Rica relied on MER to help meet its domestic electricity needs in 2014, when 251GWh was imported and 69.7MWh exported.
In 2015, the country was able to meet 99% of its power demand needs with renewable resources. In 2015, Costa Rica’s matrix had 3.1GW of installed generating capacity. Large hydro accounted for 44% of total installed capacity that year. Small hydro, geothermal, wind, biomass and solar accounted for another 36%, with oil-based power representing 20% of the total.
On 30 September 2015, the government submitted its Intended Nationally Determined Contribution (INDC) to the United Nations, reaffirming the country’s carbon neutral goal and committing to a maximum of 9MtCO2e net emissions by 2030. The proposed emissions per capita is 1.73 net ton by 2030, 1.19 net ton per Capita by 2050 and -0.27 net ton per capita by 2100. In order to neutralize emissions Costa Rica has developed a voluntary GHG registry and a “C-Neutral” certificate scheme for entities that offset their emissions. It has also put in place a voluntary trading scheme in which reforestation credits can be sold to organizations wanting to offset emissions. The carbon neutrality commitment was first announced in Costa Rica’s National Climate Change Strategy, launched in 2007.
Costa Rica offers exemptions on import, value added and income tax for select renewable energy materials and equipment. ICE periodically holds tenders to contract new clean energy capacity. A net metering program is also in place, allowing retail electricity customers to install self-generation facilities, interconnect with the utility grid, deliver surplus generation to the grid and obtain compensation in the form of a billing credit.