ENERGY

Costa Rica 2019 | ENERGY | B2B

The government has done a good job pursuing renewable opportunities, but could do even more when it comes to updating existing legislation and allowing foreign capital.

Alejandro Muñoz
ALEJANDRO MUÑOZ
Executive President
Costa Rican Petroleum Refinery (RECOPE)
Irene Cañas
IRENE CAÑAS
CEO
Grupo ICE

What is your overview of the Costa Rican energy market?

Alejandro Muñoz There are two types of energy. One provides electricity for the country, represents 26% of the country's production, and is led by the Costa Rican Institute for Electricity (ICE) and the companies that run it. There is also a small private sector associated with ICE, which generates 15% of supply and comprises cooperatives and private energy producers that are chiefly in charge of energy distribution. 99% of the energy that ICE generates is sustainable and comes from renewable sources; however, there is still much to do regarding hydroelectric and wind power. Around 65% of the country's energy production is provided by RECOPE. This is hydrocarbon-based energy, used mainly for public and private transportation as well as the transportation of goods. During the last administration, the Ministry of Environment and Energy of Costa Rica (MINAE) decided to modify the country's energy matrix and adopted a national energy plan. Under the Alvarado administration, we drew up plans for the complete decarbonization of the economy, including livestock production and other activities that generate greenhouse gases. The president asked RECOPE to transform itself and start working with alternative fuels. In the first example, we will mix both fossil and alternative fuels, for example ethanol and gasoline or biodiesel with diesel. The country produces ethanol and biodiesel, and apart from the 30% reduction in greenhouse gases, we will also revitalize the farming sector, which will help boost small and large producers of both oilseeds for biodiesel and sugarcane for ethanol.

IRENE CAÑAS We are a country that has long been developing renewable energies, and in the last four years we have been able to meet more than 99% of our energy needs from renewable sources. We have a complex mix of laws that regulate the electricity sector, including private plants and plants that belong to public entities such as JASEC, ESPH, and cooperatives. Due to such efforts, Costa Rica has enough energy to supply the entire country's demand. What has helped us is the fact that demand has not been growing at the same rate as supply, meaning we have a strong capacity installed. At the same time, it is hard to lower the tariffs because we have to cover the investments in new plants and facilities; however, new investors who want to invest in Costa Rica are demanding lower tariffs, so we need to find a solution. We are analyzing some ideas, keeping in mind that we have to innovate in a way that manages the debt on the different plants. There is an extremely complex system in place in Costa Rica, meaning we have to shut down some plants that are producing cheap energy because we have 20-year build, operate, transfer (BOT) contracts with other plants. Similarly, with such a complex system, we are forced sometimes to halt electricity production at some hydro plants in order to buy electricity from private plants with whom we have signed contracts. Therefore, we need to implement ideas in order to have an optimum system that benefits the end user in terms of price.

Are there opportunities for public-private partnerships?

AM Public-private partnerships and local-foreign partnerships are both extremely important in the electricity generation and fossil fuels replacement sectors. In addition to the hunt for funding and partners, the country should also work on promoting its national industries to develop high technology, which in the end will help us find more alternatives in the energy sector. For example, hydrogen could be used as a fuel and, with the right technology, could be possible within 10 years. However, since we do not have the necessary technology for its proper handling, packaging, and transportation, it will currently take 40. To further entice foreign companies or Costa Ricans entrepreneurs, RECOPE should work on updating the company's legislative framework and introduce the possibility of borrowing from abroad. This would be extremely feasible, since RECOPE is part of a multi-billion-dollar industry and is a reliable and renowned company. It should also continue to look into alternative fuels and their subsequent development and industrialization.

IC We are working hard to transition to electric transport, not just with cars, but also with trains. To this end, we have been working with Incofer and have two big projects in progress: a fast-electric train and an electric freight train. Similarly, we have been working on electric solutions for industry as well as the tourism and public sectors, including buses and taxis. Equally important, the group's other arm is working with the telecommunications sector on digital transformation and governance. Digitizing bureaucratic processes will greatly help our efforts to decarbonize the economy by reducing the emissions from the use of transport for bureaucratic needs.