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Electricity Sector Pins Hopes on New Energy Bill

July 9, 2010

Costa Rica is split when it comes to its energy sector.

The country’s transportation sector relies heavily on imported petroleum. National demand for oil is rising, and its cost in recent years has amounted to nearly a quarter of the country’s export earnings.

This costly reliance is perhaps the greatest threat to Costa Rica’s 2021 carbon neutrality goal.

Meanwhile, Costa Rica’s abundantly streaming water supplies and steaming geothermic crust, combined with strong gusts in the Tilarán mountain range have kept Costa Rica’s electricity sector more than 90 percent clean and renewable.

Rises in electricity demand has increased the need for bunker fuel energy plants to give a quick fix for power hungry homes.

In 2005, the fossil fuel-based thermal plants generated a mere 3.5 percent of the country’s electricity. That number quickly rose to 9.2 percent in 2008, the highest rate in history.

The government estimates the additional 2,400 megawatts of electricity needed to meet the rising demand over the next 10 years will require a $9 billion investment.

The state is prepared to directly invest roughly one-third of this amount, officials said on Wednesday. The remaining two-thirds of the investment will have to come from private investment and public-private mixed ventures.

To accomplish this feat, the plan presented Wednesday proposes opening the energy market to private energy producers and to encourage the use of renewable sources.

The General Electricity Bill presented to the Legislative Assembly last year would create a wholesale market of electricity buyers comprised of the Costa Rican Electricity Institute (ICE) and existing public and cooperative electric producers.

The private and public energy generators would compete to sell energy. The producers would be selected by a regulatory body which would define the technical conditions for participation and regulate prices.

The idea is to promote more private generation of renewable electricity while allowing ICE to maintain control of electricity distribution.

At present, private generators are limited to 20-megawatt plants, which is not optimal for creating economies of scale.

The bill would allow private generators to build plants of between 50 and 100MW –and would include incentives for renewable energy projects.

The new energy bill is slated for legislative debate the first week of August when legislators will cast their first votes for or against it.

Over the past two weeks, President Chinchilla has met with leaders from the country’s eight legislative delegations to receive input on the bill.

She has also approached important union leaders – the bill’s most likely opponents – to discuss the project.

In pre-election interviews with The Tico Times, both Chinchilla and Vicepresident Alfio Piva called the General Electricity Bill “a major priority” for their administration’s legislative agenda.

–Mike McDonald

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