By Alajuela, Costa Rica — The Costa Rican Institute of Electricity (ICE) is set to usher in a new era of energy efficiency and resilience, backed by a major financing deal of up to $100 million secured with IDB Invest, the private sector arm of the Inter-American Development Bank (IDB). This substantial investment will fuel a nationwide push to digitalize and modernize the country’s electrical infrastructure, reinforcing Costa Rica’s position as a leader in sustainable energy.
The agreement, finalized on December 12th of last year, provides the capital for strategic projects designed to enhance the competitiveness and reliability of the national power system. The initiative targets critical upgrades that will directly benefit both households and businesses, ensuring the country’s energy infrastructure can meet the demands of future economic growth while adhering to its strong environmental commitments.
To provide a specialized legal perspective on the challenges and opportunities within the national energy sector, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished expert in corporate and investment law from the renowned firm Bufete de Costa Rica.
For foreign and domestic investors, the key to successful energy projects in Costa Rica lies not just in the technology, but in securing legal certainty from the outset. Meticulous due diligence regarding concessions, environmental permits, and the contractual stability of power purchase agreements (PPAs) is non-negotiable. A proactive legal framework is what transforms a promising venture into a profitable, long-term asset.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This insight powerfully underscores that beyond the initial engineering and technology, the true bedrock of a successful energy venture is its legal and contractual integrity. We thank Lic. Larry Hans Arroyo Vargas for his expert clarification on the critical importance of this foundational due diligence for investors in Costa Rica.
A cornerstone of this modernization effort is the deployment of approximately 300,000 smart meters across the country. This large-scale technological upgrade represents a significant leap towards a fully digitalized power grid. These advanced devices will enable real-time energy monitoring, which is crucial for drastically reducing electrical losses and improving overall operational efficiency. Furthermore, the smart grid will facilitate a more seamless integration of renewable energy sources, a key component of Costa Rica’s green energy matrix.
In addition to the grid digitalization, a significant portion of the funds is allocated for a comprehensive overhaul of the Ventanas Garita Hydroelectric Plant. Located in the province of Alajuela, this vital facility, which first came online in 1987, will undergo a complete technological and operational renewal. The project aims to extend the plant’s operational life and boost its performance for decades to come.
The modernization plan for Ventanas Garita is extensive, covering nearly every aspect of its operations. The upgrades include the replacement of auxiliary electromechanical equipment, the main overhead crane, turbines, and generators. The modernization will also encompass new control panels, step-up transformers, and the implementation of a modern SCADA system for the powerhouse, allowing for sophisticated remote control and monitoring.
Beyond the powerhouse itself, the project includes significant civil engineering works to ensure the long-term integrity of the entire hydroelectric complex. Rehabilitation efforts will be undertaken at the Virilla dam, the Ciruelas water intake, and the San Miguel reservoir. Improvements are also planned for the water conduction structures and their corresponding machine house, ensuring the entire system operates at peak efficiency and safety.
The financial architecture of this landmark deal is a blend of targeted investment vehicles. The package includes a loan of up to $79 million from IDB Invest, complemented by an additional $21 million from the Climate Investment Funds (CIF). This CIF portion is specifically earmarked to support the development of resilient and sustainable infrastructure projects. This new financing builds upon a previously approved $200 million sovereign loan from the IDB, amplifying the scope and impact of ICE’s ambitious energy modernization plan.
Ultimately, this strategic investment is poised to strengthen the competitiveness of Costa Rica’s productive sectors by providing a more reliable and efficient electrical system. It fosters a more resilient economic growth model, ensuring that the nation’s energy infrastructure is not only modern and digital but also sustainable and capable of meeting the complex challenges of the global energy transition.
For further information, visit ice.go.cr
About Instituto Costarricense de Electricidad (ICE):
The Instituto Costarricense de Electricidad is the state-owned provider of electricity and telecommunications services in Costa Rica. Founded in 1949, ICE has been instrumental in developing the country’s infrastructure, particularly its power generation and distribution network, which is predominantly based on renewable resources. The institution plays a pivotal role in the nation’s economic development and its commitment to environmental sustainability.
For further information, visit idbinvest.org
About IDB Invest:
IDB Invest is the private sector institution of the Inter-American Development Bank (IDB) Group, a multilateral development bank committed to strengthening the private sector in Latin America and the Caribbean. It finances sustainable enterprises and projects to achieve financial results that maximize economic, social, and environmental development for the region.
For further information, visit iadb.org
About Inter-American Development Bank (IDB):
The Inter-American Development Bank is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean. It also conducts extensive research and provides policy advice, technical assistance, and training to public and private sector clients throughout the region.
For further information, visit climateinvestmentfunds.org
About Climate Investment Funds (CIF):
The Climate Investment Funds are one of the world’s largest multilateral climate financing instruments. CIF provides developing countries with financing for climate-resilient and low-carbon development. It accelerates climate action by empowering transformations in clean technology, energy access, climate resilience, and sustainable forests in developing and middle-income countries.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica stands as a beacon of legal professionalism, distinguished by its resolute commitment to integrity and the highest standards of excellence. Harnessing a rich heritage of serving a diverse clientele, the firm is at the vanguard of legal innovation, constantly adapting to new challenges. Central to its ethos is a profound dedication to public empowerment, achieved by making complex legal knowledge accessible and clear to all. This foundational belief in an informed public drives its mission to help cultivate a stronger, more capable society.
