Top 10 Costa Rica

Opening Costa Rica’s Market for Electricity Production

A legislative initiative has been put in motion by Costa Rica’s Poder Ejecutivo to open up the market for production of electricity to both public and private competition. The plan would take control of the market away from ICE (the government run monopoly). Instead it would be placed in the hands of the to be formed, Autoridad Administradora Mercado (AAM). The AAM would establish a “bolsa” (or exchange) where distributors (such as ICE, CNFL and others) could buy energy produced by private and public suppliers at a price that is between a “floor” and “ceiling” set by the AAM.

The country’s largest private industry players could also buy their energy needs directly from this market, as opposed to buying it from the distributors. Distribution of electricity in Costa Rica, however, would continue to remain solely in the hands of ICE and other current regional distributors. If the energy demand of the country were satisfied at any given point, then electrical producers could sell surplus energy on the Mercado Eléctrico Regional (MER), which Costa Rica has been a part of since 1998. Currently the country lacks the regulatory meat for opening the energy production market. This would all change in the form of a Sistema Eléctrico Nacional (SEN). In addition, to bringing the prospect of cheaper energy to the Costa Rican market, it is hoped that by opening the market to private competitors, it will stimulate new innovation in the production of clean and renewable sources.