Costa Rica's Renewable Energy
The Costa Rican Institute of Electricity (ICE) holds a monopoly over electricity distribution and generation in Costa Rica. There are some exceptions where other public institutions, private companies (Law #7200) and co-operatives are authorized by law to generate and sell electricity.
The most relevant exception is the National Energy and Light Company (CNFL), which is a subsidiary of ICE. Renewable energy in Costa Rica supplied 99.78% of the energy output for the entire nation in 2020. In 2018, 98% of its electrical energy was derived from renewable energy sources, about 72% of which came from hydroelectric power and 15% from geothermal. Currently, Costa Rica generates less than 1% of its energy production using solar power. In November 2021, Costa Rica approved bill 22.009 “Promotion of the generation of energy resources distributed from renewable sources,” and Costa Ricans are now able to produce their own renewable electricity and sell their surplus energy. Exports from Costa Rica are also of imported products from other countries. Most companies selling solar systems are assembled Asian solar panels with some U.S. made components.
Long-term accumulative batteries are part of the market needs both for large electric cooperatives, ICE and the household/industrial sector. EV Charging stations have been installed throughout the country, but supermarkets and other businesses are installing EV chargers for their clients.
Currently, the best prospect for U.S. companies in Costa Rica is long-term accumulative batteries and EV chargers. Newer battery technologies that are able to retain electricity for longer times are important in Costa Rica in order to supplement solar solutions. Other more traditional solar panels and equipment are needed, but the market has found Asian quality products at a very low cost, making it difficult for U.S. companies to compete.
Recent Market Trends
Electricity in Costa Rica is not cheap, with an average of USD 28 cents per Kw/hr. Currently, ICE is betting on the increase of imports and the use of Electric Vehicles in order to increase consumption, as many of its large companies have been decreasing consumption due to the installation of solar solutions. Costa Rica set climate goal in the NDC 2020, increasing its efforts to address climate change, aiming to achieve and maintain 100% renewable electricity generation by 2030.
Competitive Landscape
American firms have a strong presence in Costa Rica by selling their products through local distributors or joint ventures. The main competitors of U.S. businesses in the solar area in Costa Rica are Chinese brands. Most companies selling solar systems are local companies that assemble Asian solar panels with some U.S. made components. The main area of competition for American companies is with the accumulative batteries used in the solar equipment.
Market Entry, Technical Barriers and Tariffs
There is single specific market entry strategy to enter Costa Rica, and it is recommended U.S. made products make use of the current Free Trade Agreement (CAFTA) to eliminate the tariffs and to make solar products more competitive with Asian counterparts. The local 13% value added tax will still have to be paid. Additionally, we recommend a long-term strategy and patience as getting products known in a small market such as Costa Rica can take significant investment in time and resources. There aren’t restrictions or non-tariff barriers on renewable equipment, but companies face market competitiveness issues with Asian products already in Costa Rica.
For more information please contact U.S. Commercial Service Commercial Sepcialist, Roy Fernandez, Embassy San Jose.
Roy.Fernandez@trade.gov