On September 4th and 5th, the V Ibero-American Energy Congress took place.
Below, we share some of the highlights, as well as our own conclusions:
Sandboxes, energy communities, distributed energy resources (DER), and renewable auctions were identified as key aspects for the energy transition under the pillars of decarbonization, digitalization, and decentralization (including community self-governance). Additionally, these are initiatives and projects that promote significant dynamism in transactions, stimulate the economy and investment, and generate new business opportunities and employment sources. In the case of Costa Rica, while recent regulations on distributed energy resources and incentives for electric transportation have been approved, the country still lags in terms of energy regulation. It is worth noting that several bills are currently under discussion, such as the national electric system harmonization project and the project authorizing electricity generators to sell surplus energy in the regional electric market, both aimed at improving the efficiency of the country's various energy sources.
As general recommendations, it is essential to understand the role of law and economic regulation in the energy sector, as well as to recognize the need for competent authorities to be adequately trained with deep technical knowledge in the field. We must seriously address the risks of dependence on minerals with limited supply required for renewable technology and how to handle this challenge at the political level, as well as pay attention to the supply chain. Energy development should include environmental impact studies, a real assessment of potential biodiversity impact, vulnerability to climate risks, and social impacts. Above all, regulation based on technical criteria and greater market openness is advisable, as excessive regulations hinder the promotion of the energy transition and reduce competition.
Under the influence of ideological criteria and positions, Costa Rica’s energy model has outdated regulation that has fallen behind by several decades. The monopoly maintained by ICE in distribution, commercialization, and most of the generation, along with excessive regulation for DER for self-consumption and the lack of legal security for private generators due to limitations in applicable legislation, especially regarding power purchase agreements (PPAs), are some of the main culprits. As already known, this directly impacts the country's competitiveness, foreign direct investment (FDI), and energy costs. Likewise, during the Congress, there was a question of whether energy oversight should remain within the Ministry of Environment or under a separate ministry to promote continuous improvement and innovation in this area.
It is essential to analyze the national energy situation based on clear data and real numbers, leaving aside ideologies and biased discourses. The focus should be on creating forward-looking regulation that allows decisions to be based on science and technology. It should also be understood that the energy transition is not something that happens overnight, and the country should think about a model that aligns with its reality and energy demand conditions, as well as its environmental, social, and economic objectives.
By:
Luciana Pineda, Environmental Department
Osvaldo Madrigal, Regulatory Department
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