Costa Rica is in the process of debating a structural reform for its electricity sector that could change the way new renewable projects are incorporated: legislative file 23.414 , called the Law of Harmonization of the National Electric System , proposes to open the market to greater regulated competition, with auctions to award new generation capacity , in addition to redefining the operation and governance of the system.
The initiative proposes processes for allocating electrical capacity, under the premise that greater competition would allow for the incorporation of more cost-efficient projects and a more agile response to the growth in demand.
The debate comes at a crucial moment. Although Costa Rica maintains one of the cleanest electricity mixes in Latin America, the challenge is no longer just about sustaining that status, but about diversifying technologies, keeping pace with consumption growth, and ensuring long-term competitiveness.
Competition and auctions: the main twist of the project
The most significant economic change in the file is in the contracting scheme.
The proposal enables a wholesale market with greater participation from public and private agents, while the expansion of the system would incorporate competitive mechanisms to select projects with better technical and economic conditions.
This model represents a shift from the traditional Costa Rican approach, where the planning and execution of new capacity have historically been concentrated.
ACOPE called for moving forward with the approval of the dossier, considering that Costa Rica faces energy challenges that require structural decisions and a long-term vision.
“A responsible modernization of the electrical system can become a strategic element to attract investment, promote innovation and consolidate Costa Rica’s competitiveness ,” said María Fernanda Esquivel, president of ACOPE .
Costa Rica would not be discussing a tool unprecedented in the region, as neighboring countries have already adopted similar techniques . Recently, Panama awarded its renewable energy tender LPI ETESA 01-25 with highly competitive prices and a focus on wind power, while its subsequent tender again demonstrated strong competitive pressure for new clean capacity.
Guatemala also consolidated one of the most important processes in Central America with the PEG-5 tender, which includes more than 1500 MW, with a strong focus on solar plus storage.
The Dominican Republic, for its part, launched a public tender to incorporate up to 600 MW of renewable energy with mandatory storage, reinforcing the use of competitive processes as an expansion tool.
In this context, the Costa Rican case fits into a regional trend where auctions appear as a mechanism to incorporate new capacity, contain costs and accelerate technological diversification.
A renewable energy matrix with room to diversify
Costa Rica exhibits renewable energy indicators that are difficult to match in the region, but that does not imply a homogeneous diversification among technologies.
According to data from the Costa Rican Electricity Institute (ICE), 97.3% of the national electricity demand was met with renewable sources in 2025 , while 98.6% of total generation came from clean technologies .
However, solar energy maintains a marginal share.
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During 2025, photovoltaic technology contributed 36.6 GWh to a national production exceeding 13,352 GWh , equivalent to just 0.27% of the total. Installed solar capacity reached only 15.5 MW , compared to a total capacity of the National Electric System of 3,658.6 MW .
The energy mix continues to be largely dominated by hydroelectricity, followed by wind and geothermal, with the former contributing 9,568,471.8 MWh, while the latter reached 1,550,362.1 MWh.
This scenario explains some of the interest the reform is generating among industry players: a competitive opening could facilitate the entry of new solar developments, storage, and other generation models with a smaller presence in the current mix.
ECOSEN and the new institutional architecture
Another key element of the plan is the creation of the National Electric System Coordinating Entity (ECOSEN) .
The project proposes to establish an autonomous entity with technical and organizational independence that would assume functions related to the operation of the system, administration of the national electricity market and coordination with the regional market.
Its responsibilities would include economic dispatch, generation and transmission expansion planning, commercial operation, and technical coordination of the system.
For those who support the initiative, this redesign would allow for a clearer separation between technical operation and commercial participation, with higher standards of transparency and efficiency.
The legislative discussion is also permeated by concrete operational concerns.
ACOPE warned that Costa Rica faces a combination of factors that increase pressure on the system: sustained growth in demand, energy transition, industrial competitiveness and the effects of climate variability on the generation matrix.
The technical material accompanying the project discussion also points to a structural increase in consumption associated with electrification, industrial expansion, and new energy-intensive activities.
In that context, the discussion about opening up the market ceases to be exclusively regulatory and begins to intersect with the need to accelerate investment decisions.
Bill 23.414 raises a fundamental discussion about the Costa Rican electricity model, as it proposes to maintain the principle of priority for national demand, preserve the regulated role of distribution, and open spaces for competition in generation and marketing under new rules.
ACOPE argues that "postponing this discussion could deepen the operational and economic limitations of the current scheme."
Ultimately, the Costa Rican Congress must now decide whether the country moves towards a model with greater regulated competition to expand its electricity system or maintains a structure that, despite its renewable strengths, faces increasing demands for scale, flexibility, and technological diversification.