Renewables Powering Moves

Costa Rica Steers Towards Green Future

By Simon West

Successfully navigating the rugged terrain of Costa Rica’s sparsely populated, northernmost province of Guanacaste is no mean feat for movers of project cargo.

A traditional hub for cattle ranchers, in more recent times the province has become the beating heart of Costa Rica’s renewables revolution, accounting for almost 40 percent of the country’s electricity generation over the last 30 years.

Here, wind energy is king: Guan-acaste boasts 16 of Costa Rica’s 18 commercial-scale wind farms, all powered by the strong gales rolling down across the border from Lake Nicaragua.

A decade ago, Costa Rica-based breakbulk specialist Dacotrans was tasked with transporting parts and equipment for the 55-turbine La Gloria, one of the nation’s largest wind farms with 49.5 megawatts, or MW, of installed capacity.

Heavy-haul trailers carried ring generators, rotor blades and 22-meter-high steel towers from Caldera – the country’s main port on the Pacific Coast – through touristy Puntarenas province up towards the volcanic Cordillera de Guanacaste.

“The components were not really heavy or large, but the project was installed in a complicated zone in the high mountains in Guanacaste, where there are only poor routes and narrow infrastructure,” said Luis Gonzalez, project logistics manager at Dacotrans.

“Nonetheless, we delivered all cargo 10 days before the deadline.”

Green Energy Mix

The rapid buildout of Costa Rica’s wind industry – total installed capacity stands at 410 MW, up from 67 MW 10 years ago – has helped transform the region’s third-smallest nation into a green energy pioneer.

For five years running, power generated from renewable resources has represented more than 98 percent of total energy output. So far this year, it is 98.8 percent. By contrast, renewables provided just 28 percent of the world’s electricity in 2018, according to the U.S. Energy Information Administration, or EIA, although that figure is expected to rise to 49 percent by 2050.

Costa Rica’s hydroelectric stations, such as the 305 MW Reventazon in Limon province, the largest in Central America, are leading the charge, accounting this year for 67.5 percent of power generation. Wind represents 17 percent, followed by 13.5 percent from geothermal sources and 0.8 percent from biomass and solar.

When renewable energy is unavailable – during the December-to-April drought season, for example, which empties water from reservoirs used for hydroelectric power – bunker fuel and diesel are on tap for backup thermal generation.

Alongside wind projects, geothermal power stations, with their bulky and awkwardly shaped components, have been a boon for breakbulk and project cargo.

Inaugurated in July, the 55 MW Las Pailas II is the latest geothermal station to feed the national grid, drawing hot water and steam from 21 production wells beneath the Rincon de la Vieja volcano in Guanacaste.

A modern turbine, a substation, a fiberglass cooling tower and almost 14 kilometers of pipeline were just some of the hardware required to install the US$335 million plant, which is generating an annual average of 410 gigawatt hours, or GWh.

Costa Rica now houses seven geothermal stations – all owned by state-controlled power provider Instituto Costarricense de Electricidad, or ICE – with a total installed capacity of 260 MW, the third-largest in the Americas after the U.S. and Mexico. An eighth ICE plant – the 55 MW Borinquen 1, also in Guanacaste – is expected to come online in 2026.

ICE’s latest power generation expansion plan, which runs through 2034, calls for 653 MW of renewable energy to be added to the grid over the next 15 years, of which 280 MW corresponds to wind, 165 MW to geothermal, 161 MW to solar and 47 MW to hydroelectric.

Most of this new capacity, however, will arrive from 2028. “Our existing plants, plus those currently under construction, are sufficient to meet demand until 2027,” Javier Orozco, planning and development director at ICE, told Breakbulk.

Decarbonizing the Economy

Costa Rica’s renewable energy drive is a key component of its National Decarbonization Plan, one of the most ambitious climate initiatives in the world. Launched in February, the plan calls for an overhaul of energy, transport, waste and land use to achieve zero net greenhouse gas emissions by 2050.

Proposals for the gas-guzzling transport sector, which accounts for about 40 percent of emissions, include the full electrification of buses and taxis and a countrywide network of hydrogen filling stations for cars and lorries.
At least half of freight transport will be “highly efficient” by 2050, with emissions 20 percent below 2018 levels.
The government’s showpiece, however, is a new electric train line for the metropolitan area of capital city San Jose, a project that is already exciting breakbulk movers. Construction is slated to begin in 2022.

“The decarbonization strategy will be the best project that Costa Rica has had for many years. The implementation of different options for public transport will provide new alternatives for our business,” Gonzalez said.

But Daniel Suchar Zomer, professor of international finance at Costa Rica’s National and Latina Universities, said achieving the goals of decarbonization could be costly.

Despite the country’s green credentials, private car ownership continues to climb, driving demand for refined products. Taxes on fuel and vehicle imports are an important source of government revenues.

Furthermore, a weak economy, expected to grow just 2.2 percent this year, is straining the national budget and creating uncertainty for consumers and investors.

“On the one hand, it is a source of pride for the country to be seen as a pioneer in this very important area, but on the other, the funds earmarked for the decarbonization plan have yet to be defined,” Suchar said.

“Right now, when the economy is going through such a bad patch, securing capital and effort for a long-term project seems more utopic than reality. There is some progress on the integration of electric vehicles, which we welcome, but fossil fuel use still prevails, and there is no indication of any rapid shift in consumption patterns,” he said.

The government also has a job to do to improve lacking logistics support – “the country’s Achilles heel,” Suchar said.

To address the deficit, the administration of leftist President Carlos Alvarado Quesada unveiled last year a US$4.6 billion spending package to rebuild the country’s creaking road network, while another US$158 million was allocated this year to revamp international and regional air terminals.

Efforts to modernize the country’s commercial ports have already begun.

APM Terminals inaugurated in February a new US$1 billion container terminal at the main port of Moin on the Atlantic Coast. The facility, which includes a 650-meter quay, 29 electric container cranes and six super-post-Panamax gantry cranes, is expected to raise commerce in Costa Rica by 23 percent, according to a study quoted by APM.

Caldera on the Pacific Coast has also been upgraded to receive larger vessels and reduce wait times, with spending on a new dock, mobile cranes and reach stackers.

“The port is now better prepared to receive oversized and overweight cargo,” Gonzalez said.

Regional Integration to Spur Spending

Costa Rica is not the only country in Central America steering a course towards a green energy future.
Installed wind power capacity in the region has already topped 1.2 gigawatts, covering almost 10 percent of total electricity consumption.

Panama’s wind capacity is close to the 300 MW mark, due largely to the start-up of the 215 MW Laudato Si wind farm, the largest in Central America. The US$430 million project, located in the city of Penonome, can supply power to 125,000 households.

Honduras has also lifted its installed capacity to 300 MW, while El Salvador’s first commercial-scale wind farm, the 54 MW Ventus project in northwest Santa Ana department, is expected to come online in 2020.

“Wind resources are excellent, and some of the projects already in operation are showing extraordinarily high rates of performance, which makes wind one of the most competitive sources of electricity generation in the region,” said Ramon Fiestas, president for Latin America at the Global Wind Energy Council.

Potential also exists for offshore wind development, although a first wave of projects is unlikely to get off the ground until the second half of the 2020s, Fiestas said.

Better integration of the region’s electricity markets could spur yet more investment.

The International Renewable Energy Agency is focusing on the regional grid, known as Siepac, to promote cross-border trade of renewable power and create a clean energy corridor in Central America. Closer alignment would allow bigger producers like Costa Rica to export more surplus electricity to its neighbors.

This, in turn, would generate higher profits and reduce costs for consumers.

“There is a very high growth potential for investments that could be fully exploited,” Fiestas said. “Siepac should play a much larger role, seeking wider regional energy integration and boosting the Central America electricity market.”  

Colombia-based Simon West is freelance journalist specializing in energy and biofuels news and market movements in the Americas.

Image Credit: Dacotrans