“We’re going backwards”: Despite the urgent need for sustainable energy, Costa Rica is pulling back on the development of solar panels.

A law known as distributed generation, which was put into effect in Costa Rica in December 2021, intends to encourage the use of renewable energy generated locally, in businesses, or at home.

Generally speaking, installing solar panels is the most popular method of producing renewable energy on this scale—at least in the nation. Nevertheless, since the law went into effect, hardly many new contracts have been signed.

The majority of the roughly 3,500 contracts that have been submitted to the Public Services Regulatory Authority (Aresep) were signed prior to the implementation of Law 10.086. According to Eric Bogantes, the general regulator, there hasn’t been a similar promotion since then.

Furthermore, the landscape become increasingly complex starting in October 2023 for individuals who were interested in doing so. That same month, Aresep unveiled a new system by which distributors bill people and businesses for connecting their work to the national networks.

Some home producers and business owners who had already put the equipment on their roofs were forced to pay up to 400% more on their invoices as a result of the revised methodology.

The unexpected hike was billed cumulatively by some of the providers, which dealt a further blow to the finances of certain businesses and households.

Laura Gutiérrez speaks for 240 generators who are dispersed across the nation. Her house is one of the three spaces that she has panels in. She claims that since Aresep’s change—which was required by law—went into force, families and small enterprises have been the most negatively impacted.

Gutiérrez notes in an interview with El Observador that the 2021 law was agreed upon, deliberated, and offers Costa Rica a significant chance to alter its energy grid. Aresep and the Ministry of Environment and Energy (Minae), however, were unable to implement it and instead caused the opposite outcome.

Furthermore, he remembers that the nation is currently using bunker burning as a means of generating electricity because of the dearth of rainfall and the ensuing decline in hydroelectric production.

According to Gutiérrez, the nation produced nearly all of its electricity from renewable sources in 2023, but by just 92% the following year. In his opinion, this situation ought to promote the nation’s solar panel installation efforts even more.

But he claims that the actions of distribution businesses and governmental organizations have turned into a barrier.

He declared, “We are moving backwards and we are inhibiting ourselves from growing (group with solar panels).

As per Gutiérrez’s examples, a restaurant in Heredia used to have to pay ¢159,000 a month for power. After the panels were installed, this sum dropped to ¥93,000.

However, it increased to ¢278,000 as a result of the new technique established by Aresep and utilized in this instance by the Empresa de Servicios Públicos de Heredia (ESPH).

Another client of ESPH, a distributed generator, saw an increase in payment from ¢12,000 to £49,000 at his residence.

The following factors are taken into consideration by the tariffs, per Article 6 of the Law for the Promotion and Regulation of Energy Resources:

  • The price of the SEN’s supplemental and backup services.
  • The network’s accessibility – The price of access and interconnection
    Tolls for distribution and transmission; – Costs and investments for the grid
  • Any additional ones created by Aresep

According to the same article, economic charges or subsidies cannot be established to the prejudice of National Electric System subscribers and participants and in favor of users who install or own distributed energy resources (SEN).

Aresep admits that there are issues with the approach
In an interview with El Observador on Tuesday, January 9, the general regulator stated that they have identified at least “two situations” in which the current tariff approach needs to be changed. Put differently, he acknowledges the possibility that the one that went into effect in October was not perfect.

Bogantes made the decision to halt and reassess this practice as a result. Due to the requirement of submitting it for a public hearing, the deadline is two months at the latest.

Under the former arrangement, the surplus energy generated by homes and businesses using solar panels was fed into the distributors’ grid, which was then used by the distributors.

When the generators needed energy, they could then use the same energy that they had injected. That was the entire deal.

The two circumstances
Bogantes acknowledges that October, November, and December 20243 are the two “situations” using the approach that was in use for three months. These are the following:

  1. Partial application of the methodology: Some distribution firms did not implement all of the tariff’s components at once. As a result, they were only billing for the services that had been previously mentioned and were not compensating the generators for the excess energy that they added to the system.
  2. Inaccurate computation or issues with the formula: the distributors were supposed to bill the generators ¢24 for each kWh they generated and used. However, this ¢24 would have also been charged by the distributors for the kWh that they used to power the system. This has happened, for instance, in houses where the panels only supply a portion of the family’s energy needs. The only production connected to the panels should have been subject to the ¢24 tariff; energy consumption from the SEN should not have been. Whether the mistake was in the formula or in the distributors’ application is being investigated.

Bogantes noted that distribution businesses, who had to modify their invoicing systems, were also impacted by the law’s applicability in addition to generators.

According to him, it’s a “adjustment process in which everyone has to do that law-established objective in the best way possible.”

“It is hoped that the distribution firms would be mature and developed enough commercially to identify those surpluses at a reasonable cost and price. Particularly considering the current circumstances, where there will be a lot of thermal production and the El Niño phenomenon is about to usher in a dry season, Bogantes notes.

Additionally, the general regulator stated that there were variations in how the various distributors implemented the revisions.

He cited Coopesantos as an example, which did not apply the maximum tariffs specified in the formula while also acknowledging the payment of the surpluses put into the system.

However, he added that there were other instances where the circumstances were more “unfortunate,” such as for people who are National Power and Light Company (CNFL) clients.

“I wouldn’t want to assign a value to the situation. I get the feeling that the commercial systems have been rearranged, and maybe they might have done a better job of informing the users of what was going on and what they were doing,” he continued.

He clarified that rates increased even further as a result of the distributors’ application of retroactive charges in certain circumstances in December (i.e., including the increases from October and November).

Questions for a group of distributors Aresep
Bogantes was asked by the Chamber of Energy and Telecommunications Distribution Companies (Cedet) to reconsider his decision to discontinue the technique. It also raises doubts about the authority’s decision to make this modification following a meeting with the Distributed Generation Chamber.

Contrary to Aresep, Cedet states, “Since last October 1, when they went into effect, all companies have correctly calculated and collected them.”

Allan Benavides, president of Cedet, stated, “We, the companies of Cedet, have acted well but it seems that the value of the work we are doing is not being sized and they would like to make a forced decision favoring the particular interests of a few.”

El Observador was informed by the general regulator that procedures will be put in place to enable distributed generators to recoup any overpayments in the event that discrepancies in the quantities charged are discovered.

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