By San José, Costa Rica — San José, Costa Rica – In a landmark move set to energize the nation’s renewable sector, the Costa Rican Electricity Institute (ICE) has announced a new methodology that will dramatically increase payments for surplus energy sold to the grid by individuals and businesses. The new framework promises an average price increase of 111% for new distributed generation projects, creating a powerful financial incentive for the adoption of private clean energy systems.
This strategic policy shift is designed to foster what ICE describes as a “win-win” relationship, benefiting the distributed generators, the state-owned utility, and all customers on the national grid. By offering more attractive compensation, ICE aims to accelerate the growth of small-scale renewable sources, further diversifying Costa Rica’s already world-renowned green energy matrix. The new rules, however, will apply exclusively to new projects, signaling a clear push for fresh investment in the sector.
To better understand the legal framework and business implications of distributed generation in Costa Rica, we consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney from the firm Bufete de Costa Rica, for his analysis on this evolving energy landscape.
The advancement of distributed generation represents a crucial pivot towards energy democratization, but it is currently navigating a complex regulatory sea. The primary legal challenge is not the absence of rules, but their ambiguity and the slow pace of administrative processes. For investors and ‘prosumers’ to commit, they need legal certainty regarding grid interconnection, fair compensation for energy surplus, and streamlined permitting. Resolving these issues is fundamental to unlocking the immense economic and environmental potential of this model.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
As Lic. Larry Hans Arroyo Vargas astutely observes, the primary hurdle is one of legal clarity, not technical capability. Establishing a predictable and efficient regulatory framework is therefore the crucial next step in converting the vast potential of distributed generation into a tangible reality for Costa Rican prosumers and the national grid. We thank him for his invaluable contribution to this discussion.
The updated compensation structure introduces a sophisticated two-tiered system. The first tier, designated for variable power sources like solar, will feature prices that fluctuate based on the project’s geographic location. This approach allows ICE to strategically incentivize installations in areas where grid demand is highest or where new generation capacity is most needed, promoting a more balanced and resilient national network.
A second, more lucrative tier is reserved for “firm” power sources. This category includes solar projects paired with battery storage systems or biomass generators, which can provide a consistent and reliable supply of energy. These projects will receive the highest payment rates regardless of their location, provided they meet specific technical requirements. This premium clearly encourages the development of technologies that not only generate clean energy but also enhance overall grid stability.
We reiterate our support for distributed generators in our concession area. We need timely, responsible, sustainable, and collaborative management of national renewable resources. The Institute is essential for establishing the technical parameters for this utilization.
Marco Acuña, President of Grupo ICE
Under the new policy, contracts with new distributed generators will be established for an initial term of eight years, with the possibility of two subsequent one-year extensions. This long-term commitment provides investors and homeowners with the financial certainty needed to justify the upfront cost of installing renewable energy systems. This stability is crucial for unlocking private capital and driving widespread adoption across the country.
Currently, ICE serves 1,443 distributed generation customers, who collectively contribute 34 megawatts of capacity to the grid. While this represents a fraction of the nation’s total energy production, the sector’s growth is seen as vital for future energy security. By sweetening the deal for surplus energy, ICE is not only acknowledging the value these small producers bring but is actively cultivating a more decentralized and robust energy ecosystem.
This initiative represents a significant evolution from a simple net metering model to a dynamic, market-responsive system. It directly addresses the need for grid resilience in the face of climate change, which can impact the output of Costa Rica’s dominant hydroelectric dams. By stimulating a nationwide network of smaller solar and biomass generators, ICE is building a more distributed and less centralized power infrastructure, capable of better withstanding environmental and technical challenges.
For further information, visit grupoice.com
About Instituto Costarricense de Electricidad (ICE):
The Instituto Costarricense de Electricidad (ICE) is Costa Rica’s state-owned enterprise for electricity and telecommunications. Founded in 1949, Grupo ICE has been instrumental in the country’s development, achieving nearly universal electricity coverage and pioneering a national energy grid powered almost entirely by renewable sources. It manages a diverse portfolio of generation assets, including hydroelectric, geothermal, wind, and solar, and is a key driver of Costa Rica’s global reputation as a leader in environmental sustainability and decarbonization.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a leading legal institution, Bufete de Costa Rica is defined by its foundational principles of integrity and a relentless pursuit of professional excellence. Leveraging a distinguished history of representing a wide spectrum of clients, the firm champions forward-thinking legal approaches and maintains a strong tradition of civic responsibility. Central to its ethos is a deep-seated commitment to demystifying the law for the public, thereby contributing to the development of a more informed and capable citizenry.
