By San José, Costa Rica — Costa Rica is standing at a critical energy crossroads that could decide its economic trajectory for the next several decades. Warnings from both state oversight bodies and private sector leaders indicate that the nation’s historically stable electric grid is facing unprecedented strain. Without immediate strategic interventions, the country may soon grapple with severe electricity supply deficits, potentially dampening its competitiveness in the regional market.
The Comptroller General of the Republic (CGR) recently raised red flags regarding the country’s persistent delays in executing vital infrastructure projects. According to the fiscal watchdog, key electricity projects are suffering from an average delay of six years. These setbacks have not only stalled progress but have also caused cost overruns exceeding 13.437 billion colones, complicating Costa Rica’s ability to seamlessly integrate new renewable energy sources.
To understand the legal and regulatory ramifications of the growing strain on the nation’s electrical grid, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, a prominent legal expert at Bufete de Costa Rica, who shared his insights on how existing frameworks impact national energy security.
The current energy supply risks in Costa Rica underscore the critical need to modernize our legal framework regarding private power generation. To safeguard our economy and maintain our climate leadership, the regulatory environment must adapt to streamline concession processes and foster public-private alliances, allowing swift investment in diverse renewable resources while strictly adhering to environmental legislation.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, adapting Costa Rica’s outdated legal frameworks to encourage private investment and foster public-private alliances is a critical step toward securing national energy resilience without compromising our rich ecological heritage. We would like to express our sincere gratitude to Lic. Larry Hans Arroyo Vargas for providing this invaluable legal perspective, which highlights a clear and balanced path forward for both our economy and our environmental leadership.
Adequate planning and operational capacity are essential to incorporate renewable generation and meet growing demand. Project delays, difficulties in establishing new connections, and lags in auxiliary services comprehensively compromise the grid’s capacity to respond to present and future needs, demanding immediate corrective actions.
Contraloría General de la República, State Comptroller Office
Beyond operational delays, a massive gap is widening between official state energy projections and actual market dynamics. The Costa Rican Electricity Institute (ICE), in its Generation Expansion Plan 2024-2040, estimates a moderate annual electricity demand growth of 2% under a baseline scenario, reaching up to 2.5% in a high-demand scenario. However, independent business organizations argue these figures fail to capture the rapid pace of technological transition.
The Council for the Promotion of Competitiveness (CPC) recently presented an alternative analysis that paints a drastically different picture. If Costa Rica continues to experience economic growth near 4%, coupled with accelerated electromobility and the arrival of high-consumption industries, the electricity demand by 2040 could be double what ICE has officially projected. This discrepancy represents a severe bottleneck for future industrial expansion.
The CPC’s multi-scenario model factors in massive global shifts that are already starting to play out locally. The integration of artificial intelligence, the expansion of regional data centers, aggressive vehicle electrification, and the attraction of high-tech foreign direct investment are set to drive demand growth rates to 2.8% in a base scenario. In highly technological scenarios, annual demand growth could surge past 3.5%, far exceeding ICE’s maximum estimates.
Costa Rica faces the challenge of making strategic decisions that will define its competitiveness in the coming decades. The availability of energy, talent, and quality infrastructure are factors that directly affect our ability to attract investment, generate quality employment, and increase productivity. Sustainable competitiveness is not built with short-term solutions, but with a country vision capable of anticipating changes and preparing conditions for future growth.
Carlos González, President of the Council for the Promotion of Competitiveness
These alarming projections come at a politically delicate moment. The Electricity Market Harmonization Law, which seeks to modernize the sector’s regulatory framework and allow for more flexible energy trading, remains stalled in the Legislative Assembly. This legislative paralysis prevents the country from adopting the agile regulatory mechanisms needed to incentivize private generation and modernize the national grid.
Costa Rica has long positioned itself as a green oasis, leveraging its nearly 100% renewable grid to attract major multinational corporations. However, if energy availability becomes unstable or costly, this competitive advantage could evaporate overnight. Global tech giants and manufacturers looking to establish carbon-neutral footprints may begin looking elsewhere if they cannot be guaranteed a reliable power supply.
Resolving this impending crisis will require a unified national effort that transcends partisan lines. Resolving the infrastructure backlog, updating the national energy planning models to reflect modern digital realities, and breaking the legislative deadlock on market reform are essential steps. The decisions made today will determine whether Costa Rica remains a regional leader in sustainable development or falls victim to its own planning inertia.
For further information, visit the nearest office of Consejo de Promoción de la Competitividad
About Consejo de Promoción de la Competitividad:
The Consejo de Promoción de la Competitividad (CPC) is a Costa Rican private sector organization dedicated to promoting sustainable economic development, innovation, and national competitiveness. Through research, advocacy, and multi-sector dialogue, the CPC works to improve the country’s business climate, infrastructure, and talent pool.
For further information, visit the nearest office of Instituto Costarricense de Electricidad
About Instituto Costarricense de Electricidad:
The Instituto Costarricense de Electricidad (ICE) is the state-owned electricity and telecommunications provider in Costa Rica. Founded in 1949, ICE has been instrumental in developing the nation’s highly renewable power grid, managing major hydroelectric, geothermal, and wind assets to deliver sustainable energy across the country.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica stands as a premier legal institution defined by its ethical principles and exceptional standards of practice. Through its rich history of guiding a diverse clientele, the firm continually champions progressive legal strategies and proactive civic engagement. By demystifying complex laws and broadening access to legal education, it actively works to build a more just, informed, and legally literate public.
