New regulations would eliminate some of the red tape that has impeded the growth of private solar energy generation

Data from the Costa Rican Chamber of Distributed Generation (Cámara Costarricense de Generación Distribuida) reveal that in the country there are 2,000 roofs with solar panels for electricity generation, while another 1,000 are about to be installed in the coming months.

However, the number of people interested in taking advantage of solar energy to lower their electric bill could increase in the coming years if the new proposal for a Regulation for Distributed Generation for Self-consumption with Renewable Sources is approved and implemented.

At this time, the document that would eliminate some of the red tape that has impeded the growth of that activity was put into consultation by the Ministry of Environment and Energy (Minae), explains William Villalobos, legal adviser to the Chamber.

One of the main changes, according to Villalobos, is that the new regulation introduces two new generation models, which would open up a range of options and lower costs for those interested in installing solar panels on their roofs.

The expectation is that within five years, the generation of energy through the sun will reach 5% of the national electrical matrix. According to information from the Instituto Costarricense de Electricidad (ICE), it is currently 0.9%, although in 2015 it was only 0.1%.

Currently, if a person wants to install solar panels to produce their own solar energy, the current regulation allows them to operate in two ways.

Isla (Island): An individual places panels to satisfy their electrical demand because the electrical distribution network is not available on their farm, house or business. It consumes what it produces and if there are surpluses they are not used unless battery storage is installed.

Medición Neta Sencilla (Simple Net Measurement): The panel system of the house or company is interconnected with the electrical network, so the surpluses it produces goes to the electricity distribution company and if the user requires it back, the network can inject energy.

In the second modality, the user faces two problems: the existing regulation establishes a cap of 15% of solar panel systems for each electrical circuit, if the location where they live has already reached that limit, it will be a problem.

Furthermore, based on the 2015 regulation, when an owner generates more energy than they consume, the surplus goes to the electricity distribution network, but the regulation only allows to obtain only 49% of it back.

Villalobos explained that the new regulation would enable the installation of panels without injecting the surplus into the network, which would diminish the importance of the cap system. In those cases, the owner can install storage batteries for later use.

Also, it eliminates the 49% rule for new contracts and forces electricity distribution companies to publish the percentage of caps for each circuit.

Another variation is that a person or company could generate energy in one location, but consume it in another.

For example, if an apartment tower in San José does not have enough roof area to produce electricity from the sun, the owner can decide to use a property in their name in Puntarenas to install the solar panels and transfer it to the San Jose property for use.

“More and more, human beings want to be the producer of their own electricity (…) very important projects such as electric trains are coming and the country is going to require greater and better conditions of electrical demand, there are more electric cars and recently the use of electric buses has been announced, even the Aresep (Public Services Regulatory Authority) has already approved a rate for this type of service,” said Villalobos.

For the Minae, the intention of the new regulation is to promote the generation of solar energy, as well as to strengthen and diversify electricity production from renewable sources, according to Rolando Castro, vice minister of Energy.

“We seek to learn from the lessons given by current regulations, take advantage of technological advances and clarify, even more, the relationship between subscribers and distribution companies so that there is more transparency. We also seek to promote this type of generation, keeping a balance to guarantee the security of the national electricity grid,” Castro declared.

In this relationship, the National Center for Energy Control (Cence) would play a fundamental role in resolving possible differences based on technical criteria.

The Chamber calculates that the cost of installing solar panels in a house where four people live ranges from US$8,000 to US$12,000, which would result in savings on the electricity bill of up to 60%.

The interested parties must process the viability before the distribution company to specify if in their locality such systems can be connected to the electrical circuits, in addition to signing an interconnection contract with the distribution company. However, that process may take a few months.

This sector has not received responses from Aresep for three months, a wait that caused a 39% drop in its sales of solar panels and violates the National Decarbonization Plan.

The Public Services Regulatory Authority (Aresep) has a delay of three months in the delivery to define the methodologies and tariff settings necessary for the Law for the promotion and regulation of energy resources distributed from renewable sources, signed in January 2022 , enter into operation.

This delay has generated losses of up to ₡1,500 million in the market dedicated to the sale of renewables, this is confirmed when the figures for the first quarter of 2023 are compared with the same period of the previous year.

The Chamber of Distributed Generation (CGD) made a call through its social networks to Aresep to move forward with the fulfillment of the obligations attributed to it so that the Law can come into force in favor of consumers and the national effort towards sustainability.

This situation interferes with the fourth objective of the National Decarbonization Plan, which aims to consolidate a national electrical system capable of supplying and managing renewable energy at a competitive cost for users. One of the goals of the Plan for 2030 is for the country’s electrical matrix to operate 100% with renewable energy.

William Villalobos, executive director of the CGD, commented through a video published on the Chamber’s social networks that they see “with great concern that Aresep has not been proactive and diligent to achieve these methodologies in time.”

Teletica.com consulted: the Aresep press department about this situation, and they confirmed that, after more than a year, they are still in the process of developing the methodologies and tariff settings, which must then be approved by the board of directors.

It should be noted that Aresep had an original deadline of 12 months to deliver the methodology, but that period expired three months ago, so the renewable sector has now been without the necessary methodology for 15 months.

Likewise, the entity assured that it expects this process to be completed during the first half of the year, although it did not provide further details on how it is working to expedite its development.

“Of course, we agree on the generation of this type of energy, as well as responsible purchasing and the obligation for companies to develop these processes,” commented Carolina Mora, communications manager at Aresep.

Alberto Rodríguez, coordinator of the technical safety committee of the CDG and CEO of the company GoSolar, one of the main companies in the industry in the country, argues that, by not having a complete legal framework, consumers are limited to systems that do not inject energy to the grid , so they are not taking advantage of the benefits that the law itself grants.

Furthermore, he highlights that this situation generates uncertainty in the market and makes the work of distributors and solar companies difficult, which cannot plan their projects properly because “they are not clear about the rules of the game.”

“Due to this, the market has been exposed to the loss of hundreds of clients who cannot install systems with surplus shipping to the network… This implies losses in the sales of companies, as well as in the possibilities of savings of customers,” said Rodríguez.

By not enabling these rates, it is only possible to offer strict self-consumption systems, which are smaller, generate less savings and reduce customers’ opportunities to save on the service.

“No one really benefits from this legislative impasse, we all lose, particularly private companies and end consumers,” defends Rodríguez.

According to Rodríguez and Villalobos, this Law is “neuralgic” for Costa Rica, since it allows the incorporation of a historically untapped generation source that showed favorable growth and that, at the same time, makes the country’s energy matrix more resilient.

Aresep responds:

When asked by this media about the delay, Daniel Fernández, director of the Aresep Regulatory Development Center, responded by indicating that, “from the beginning, the 12-month period seemed short to us” and attributes the waiting time to the fact that that this regulation goes hand in hand with a public hearing, so it depends on a process of citizen participation.

Another important aspect that stood out is that the previous regulation should have been approved in July 2022, but was not finalized until February 2023 and, therefore, Fernández explained, the process could not move forward without having the document to know how could affect developing regulations.