For some time, the price of hydrocarbons has increased ostensibly, while the world market for fossil fuels has been characterized by fluctuations in the price of crude oil and by a shortage in supply. The effects are felt in countries of all latitudes, impacting domestic and industrial electricity rates.
However, these fluctuations in gas and oil prices do not seem to affect some countries, specifically those with a matrix of electricity generation based on renewable sources.
The Costa Rican Example
This is the case of Costa Rica, a Central American country with 51,100 km2 (31,752 square miles) of territory and a little more than five million inhabitants, with a steep topographic relief, coasts on both oceans and an exceptional water resource, made up of abundant rivers and adequate rainfall. The country has a rainy season from November to February, but it has rainfall throughout the year. However, in terms of the amount of rainfall, the west is rainier (91 inches) than the east of the country (67 inches). The central region presents a dry period between January and March and a rainy period between May and October.
Currently, during an average year in Costa Rica, 68 percent of the electricity generation matrix is achieved with hydroelectricity and the remaining 32 percent, through a combination of geothermal energy, biomass combustion (cane bagasse), wind and solar energy.
Costa Rica has 27 dams, nine geothermal plants, and six wind plants that enable it to generate its electricity with renewable resources available in its own territory. According to data from the Costa Rican Chamber of Energy Distribution and Telecommunications Companies (CEDET), in 2022, the renewables in power generation was 98.58 percent.
Renewable energy consumption began in the mid-20th century, with the creation of the Costa Rican Electricity Institute (ICE), after the struggle of several generations trying to solve energy shortage problems. During the 1940s, electrification only reached 14 percent of the territory.
Today, the electrical matrix is a world reference. Given its diversity of renewable sources, the country can plan both the generation and distribution of electricity according to demand. In the dry season, for example, the flow of the rivers decreases, but stronger winds blow and there are more hours of sunlight. And the rainy season favors water storage and generation by hydroelectric plants.
These 40 generation plants, and robust electrical transmission and distribution systems light up and move Costa Rica from coast to coast, both in the main cities and in rural areas. This is achieved independently of international fluctuations in fuel prices.
The Benefits of Decarbonization
The use of renewable fuels has also promoted the creation of energy cooperatives and municipal companies in Costa Rica, that bring electricity to rural areas, allowing these communities to enjoy education, health services, Internet and others that depend on the electricity supply.
Likewise, the use of renewable energies facilitates the production of electricity in remote areas, through solar panels and battery systems. Not only for homes located outside the national distribution network, but also for schools and park ranger facilities.
All this has allowed national electricity coverage to reach 99.4 percent of the territory.
Other indicators that are indirectly related to the use of renewables are: The country’s literacy rate of 98 percent, a robust health services coverage, both in populated centers and in peripheral areas, with national hospitals specializing in gerontology, pediatrics, maternity, psychiatry and rehabilitation, all illuminated and operating with clean energy.
The Costa Rican Vice Minister of Energy, Ronny Rodríguez Chaves, affirmed this during the Renewables Forum, organized by the EU-Latin American Energy Association, held in Hamburg, Germany, in 2022. “These achievements are a phenomenon associated with the high environmental awareness of the population, a planning process of many years, a commitment that goes beyond the government that exercises power. It is a long-term planning that began decades ago and goes, in some cases, beyond 2050.”
This system is jealously guarded by society and its environmental and industrial sector because, ultimately, the environment is also a matter of attraction for national and international investment and generation of opportunities, new jobs, technological incorporation and the ability to produce renewable energy without affecting production costs.
In the last 10 years, some Central American countries have been implementing the Costa Rican model, diversifying their electrical matrix with the use of renewable energies, but achieving clean energy autonomy is a process in the medium and long term and, in 2022, countries like Guatemala, El Salvador, Honduras and Panama still depended on fossil fuels to generate between 30 to 45 percent of their electricity.
With an average consumption of 200 kilowatts/hour per month (about 12,400 colones or US$20), the residential electricity rate has been decreasing in Costa Rica by 2.63 percent since 2010. While El Salvador and Honduras have increased it by 25 percent and 41 percent, respectively, during the same period.
What Is Coming for Costa Rica?
Costa Rica does not focus solely on electricity. The country is working on a decarbonization program that includes the replacement of boilers and furnaces that work using petroleum derivatives for new ones based on renewables, and new storage systems for green hydrogen.
In the area of domestic fuels, Costa Rica, through the Costa Rican Energy Institute, foresees that homes will be transformed as part of the so-called Fourth Industrial Revolution (“Industry 4.0”). Homes that currently use gas for food preparation will end up switching to electric induction cooking, which is much more cost-effective, less dangerous and with fewer emissions.
Regarding the decarbonization of transportation, Costa Rica is developing a program that incentivizes and promotes the use of electric vehicles (only two percent of total vehicles are electric). According to data from the Ministry of the Environment (MINEA), one of the great challenges is to modify at least five percent of the bus fleet by 2023, going from the use of diesel to electricity with an investment of more than 350 million dollars.
During 2022, the electric buses that operated on an urban route in the capital San José incurred an operating cost five times less than those powered by fossil fuels. For mass cargo transportation, Costa Rica plans to open an international bid for more than $800 million for a 260-kilometer-long electric cargo train that will partially replace transportation based on trucks that use petroleum derivatives.
The UN Secretary General António Guterres has made an urgent call for an immediate radical action to tackle global warming. He described the current conditions as “terrifying and just the beginning, the era of global warming is over, and the era of global boiling has arrived. The air is unbreathable, the heat is unbearable, and the level of profit from fossil fuels and climate inaction is unacceptable.” Guterres will host a Climate Ambition Summit in New York in September, where he will call on developed countries to be carbon neutral by 2040 or earlier, and emerging economies by 2050.
Countries may be slow to incorporate renewables because of the cost, but if we think in terms of human health, the effect of climate change, and the revitalization of the economy at the local level, renewable energies become extremely appealing. Considering the Costa Rican model, and adapting it to the possibilities and needs of other countries, undoubtedly would define the future of the planet and ours as a species.
- Danneman Victoria. (November 11, 2022). “Costa Rica, it is possible to have energy sustainability.” Deutsche Welle Latin America.
- Antonio Guterrez. UN Secretary General. (July 27, 2023). “Apart from the discourse on global warming and its consequences.” Euronews Latin America.
- Costa Rican Chamber of Energy Distribution and Telecommunications Companies. August 2022 press release.
- Soto Mendez Michelle. (October 26, 2022.) “Costa Rica, a matrix based on renewables, provides security in the face of international crises.” Journalistic group El Planeta.
Angela Levy was born in Colombia and became a U.S. citizen in 2012. She is now a dual citizen of the two countries. She holds two master’s degrees, an MBA and another in accounting. Levy worked as a production engineer in Colombia before moving to the U.S., where she worked in the finance and accounting group at Halliburton for a decade. She later worked with special needs children for five years. Levy now spends her time traveling the western U.S. and recently returned from an extended visit to Colombia.
Carlos Arturo Toro is a native of Colombia. An economist, he holds a master’s degree in finance. For more than 15 years, he was dedicated to the banking sector, as a credit analyst for Banco Popular de Colombia and as the national director of credit of various financial institutions. For several years after finishing his career in the banking sector, Toro worked as a tropical glacier guide and, periodically, as a volunteer park ranger for the Colombian National Park.