Costa Rica is frequently presented as a country powered entirely by renewable energy. The description is close to accurate when applied specifically to electricity generation: hydropower, geothermal energy, wind, biomass and solar routinely provide almost all the electricity supplied to the national system. In 2025, renewable sources accounted for approximately 98.6% of generation.
That achievement is substantial, but it does not mean Costa Rica has completed its energy transition. Hydropower still provides most electricity, making the system sensitive to rainfall and prolonged dry conditions. Solar power contributes only a small fraction of generation, while the transport sector remains heavily dependent on petroleum. Electricity demand is also expected to grow as the population, services economy, digital sector and electric-vehicle fleet expand.
Costa Rica’s next renewable challenge is therefore different from that of a country still replacing coal-fired generation. It must protect an already clean electricity system while making it more diverse, climate-resilient and capable of supporting the electrification of transport and other fossil-fuel uses.
Water Remains the Strength and Weakness of the Electricity System
Hydroelectric power is the central pillar of Costa Rica’s renewable electricity model. Mountain ranges, heavy seasonal rainfall and river systems allowed the country to develop large and medium-sized plants that can serve cities, tourism, agriculture and industry. Reservoir facilities such as Arenal, Cachí, Pirrís, Angostura and Reventazón also give the system the ability to store water and adjust output according to demand.
In 2025, hydropower supplied roughly three-quarters of Costa Rica’s electricity. This large contribution helps explain why the country can achieve renewable-generation shares above 98% without extensive solar development or nuclear power. Hydroelectric reservoirs can provide both energy and operational flexibility, supporting the integration of wind and other variable sources.
Dependence on water also exposes the system to climate risk. Lower rainfall reduces river flows and reservoir levels, particularly during strong El Niño periods. Costa Rica experienced this pressure during the dry conditions affecting generation in 2023 and 2024. Renewable output recovered strongly in 2025, but renewed El Niño conditions in 2026 again placed attention on hydroelectric availability, thermal backup and regional electricity imports.
Thermal plants remain part of the system even though they operate infrequently compared with renewable facilities. They provide backup when water, wind or imported electricity cannot meet demand. Their use raises generation costs and emissions because they generally burn imported petroleum products.
Costa Rica’s renewable model is therefore not weakened by the existence of backup generation. The larger issue is how frequently that backup will be needed as rainfall patterns become less predictable. Greater diversity, storage and stronger electricity connections can reduce the amount of fossil-fuel generation required during dry years.
Geothermal and Wind Power Give Costa Rica Valuable Diversity
Geothermal energy is one of Costa Rica’s most strategically important resources. The country’s volcanic geology provides underground heat that can produce electricity throughout the day and across different seasons. Unlike solar and wind, geothermal plants can operate as firm generation, making them particularly valuable when hydropower output falls.
Most geothermal development has taken place in Guanacaste, including facilities associated with the Miravalles and Las Pailas fields. The technology usually supplies around one-tenth of national electricity. Its contribution is smaller than hydropower but more consistent, giving it an importance that cannot be judged by annual generation share alone.
Further geothermal development involves difficult environmental choices. Some promising resources are located near or within protected areas, where exploration and plant construction may conflict with conservation priorities. Costa Rica has built much of its international environmental reputation around forests, national parks and biodiversity protection. Expanding geothermal generation therefore requires careful decisions about whether and under what conditions underground resources should be developed.
Wind energy provides another important complement. Strong seasonal winds, particularly in Guanacaste and other elevated or exposed areas, often occur during the drier months. This allows wind farms to support the system when rainfall and some river flows are lower. Wind generated approximately 12% of Costa Rican electricity in 2025, placing it behind hydropower but close to geothermal energy.
Costa Rica’s mix of reservoirs, geothermal plants and wind farms is the main reason its renewable performance has been more durable than a system dependent on one weather-sensitive technology. The next step is to expand that diversity without creating unnecessary environmental or grid-management costs.
Solar Power Is Still the Missing Element
Costa Rica has abundant sunlight, yet solar remains a very small part of national electricity generation. In 2025, its contribution was still measured in fractions of one percent. That position contrasts sharply with other countries where falling panel costs have made solar the leading source of new capacity.
Several factors explain the slower development. Costa Rica already built a low-carbon electricity system before modern solar became inexpensive. Hydroelectric, geothermal and wind facilities met most national demand, reducing the urgency to procure large solar plants. The structure of the electricity sector and previous rules governing self-generation also limited the pace at which households and businesses adopted rooftop systems.
Solar now has a clearer strategic role. Daytime generation can support commercial demand, tourism facilities, air conditioning and electric-vehicle charging. Distributed panels can reduce pressure on parts of the distribution network, while utility-scale projects could conserve reservoir water during sunny periods. Solar combined with batteries could provide evening flexibility and improve resilience for remote facilities or communities vulnerable to outages.
Large-scale adoption will require technical standards, fair compensation rules and investment in smarter distribution systems. Regulators and utilities must balance the interests of customers with solar panels against those who continue to depend entirely on the shared grid. Network costs do not disappear when a customer produces part of its own electricity.
The objective should not be to replace Costa Rica’s hydroelectric or geothermal base with solar. It should be to use solar and storage where they improve resilience, lower costs and reduce reliance on thermal generation during dry conditions.
A Renewable Grid Does Not Make Transport Renewable
The distinction between renewable electricity and renewable total energy is especially important in Costa Rica. Road transport remains the country’s largest source of energy-related carbon emissions. Private cars, buses, freight vehicles and motorcycles rely mainly on gasoline and diesel, both of which must be imported.
This creates a national energy system with two different profiles. Electricity is overwhelmingly renewable, but transport remains dominated by petroleum. Traffic congestion in and around the Greater Metropolitan Area increases fuel use, economic costs and local air pollution. An electricity achievement above 98% does not remove these transport-sector pressures.
Electric vehicles offer Costa Rica a direct way to use renewable electricity to displace imported fuel. As more cars, buses and commercial fleets become electric, the environmental value of the power system can extend into mobility. Charging infrastructure, vehicle prices, fleet renewal and electricity tariffs will influence how quickly this occurs.
Public transport is equally important. Electrifying buses and improving rail service can reduce petroleum use without requiring every household to purchase a new vehicle. The transition will also increase electricity demand, making generation and grid planning more important. Costa Rica must add clean capacity early enough to ensure that transport electrification does not increase dependence on thermal backup.
Green hydrogen may eventually serve applications that are difficult to electrify directly, but its immediate role is likely to remain limited. Direct use of electricity is generally more efficient for passenger cars, urban buses and many commercial vehicles.
Resilience Is the Next Measure of Renewable Leadership
Costa Rica’s electricity system is managed around the central role of the state-owned Instituto Costarricense de Electricidad, together with its subsidiary, municipal utilities, rural cooperatives and regulated private generators. This structure supported nationwide electrification and coordinated investment in large renewable facilities. It also places major responsibility on national planning to anticipate demand and climate conditions.
Regional electricity trade provides an additional source of flexibility. Costa Rica can exchange power through the Central American electricity market when transmission capacity, prices and supply conditions allow. Imports can support the system during shortages, while surplus renewable generation can be exported at other times. Regional trade cannot replace domestic investment, but it can reduce the cost of balancing a relatively small national grid.
Future priorities include modernized transmission and distribution networks, additional firm renewable capacity, solar generation, batteries, demand management and reliable backup. The system must also prepare for extreme weather, shifting rainfall patterns and higher demand from electric transport.
Costa Rica has already demonstrated that a modern economy can operate with electricity generated almost entirely from renewable resources. Its next test is harder to summarize in a single percentage. The country must maintain that performance during dry years, diversify beyond hydropower and use its clean grid to reduce petroleum consumption across the rest of the economy.