The LatAm Thread

Countries › Costa Rica › Guide › 12. Sectors › Private power generation in Costa Rica: Ley 7200 plants, ICE purchase contracts and ARESEP tariffs

Private power generation in Costa Rica: Ley 7200 plants, ICE purchase contracts and ARESEP tariffs

Last verified: 2026-10-30 · Status: Stable

Electricity in Costa Rica is built around the State utility ICE, which buys power from private plants under Ley 7200. Private plants up to 20 MW need an ICE eligibility declaration and an ARESEP concession, and plants of up to 50 MW can win ICE tenders under BOT style contracts of up to 20 years that hand the plant to ICE at the end. Plants must be at least 35% Costa Rican owned, and private generation is capped at a share of national capacity.

USD figures use the Banco Central de Costa Rica reference selling rate of ₡454.82 per US dollar published for 29 October 2026 (indicator 318 on bccr.fi.cr), rounded to the cent.

Key facts

Maximum size of a Chapter I private plant20 MWLey 7200 art. 2 and 5, as of 2026-10-30 · in force
Cap on Chapter I parallel generation in national capacity15 %Ley 7200 art. 7, as of 2026-10-30 · in force
Maximum block per Chapter II tender plant50 MWLey 7200 art. 20, as of 2026-10-30 · in force
Maximum term of an ICE purchase contract (Chapter II)20 yearsLey 7200 art. 22, as of 2026-10-30 · in force
Minimum Costa Rican share capital of a private generator35 %Ley 7200 art. 3, as of 2026-10-30 · in force
ICE deadline for eligibility declaration120 daysLey 7200 art. 6, as of 2026-10-30 · in force

The rule

1. Autonomous or parallel generation is power from limited capacity plants owned by private companies or cooperatives that can be integrated into the national grid; limited capacity means hydro or non conventional plants of up to 20,000 kW.Ley 7200, Ley que Autoriza la Generación Eléctrica Autónoma o Paralela, art. 1 and 2, 1995-05-09 official text · verified 2026-10-30
2. ICE purchases are of public interest only from cooperatives and private companies in which at least 35% of share capital belongs to Costa Ricans.
Cost to do it: Ownership structure: at least 35% Costa Rican capital in the generating company.
Example: A ₡1,000,000,000 share capital company needs at least ₡350,000,000 held by Costa Ricans. / About US$769,535.20 of US$2,198,672.00.Ley 7200, Ley que Autoriza la Generación Eléctrica Autónoma o Paralela, art. 3, 1995-05-09 official text · verified 2026-10-30
3. ARESEP (successor of the SNE) grants concessions for limited capacity plants of up to 20,000 kW for no more than 20 years; above that size, or when a holder's concessions add up to more, legislative approval is required.Ley 7200, Ley que Autoriza la Generación Eléctrica Autónoma o Paralela, art. 5, 1995-05-09 official text · verified 2026-10-30
4. Before the concession, ICE must issue a declaration of eligibility within 120 calendar days of the application; ICE can only declare projects eligible while parallel generation stays below 15% of the capacity of the national system, and rejects projects that interfere with earlier projects or concessions.Ley 7200, Ley que Autoriza la Generación Eléctrica Autónoma o Paralela, art. 6 and 7, 1990-09-28 official text · verified 2026-10-30
5. Plants of 20,000 kW or more need an approved environmental impact study; decisions on eligibility and the environmental study can be appealed to the superior within 15 business days.Ley 7200, Ley que Autoriza la Generación Eléctrica Autónoma o Paralela, art. 8 and 9, 1990-09-28 official text · verified 2026-10-30
6. At signing of the supply contract the generator posts an unconditional environmental performance guarantee in favour of the ministry of 4% of project value during construction and for one year after start of operation, then 1% for the whole concession.
Cost to do it: Guarantee of 4% of project value during construction, then 1%.
Example: A project worth ₡22,741,000,000: ₡909,640,000 during construction, then ₡227,410,000. / On a US$50,000,000 project: US$2,000,000, then US$500,000.Ley 7200, Ley que Autoriza la Generación Eléctrica Autónoma o Paralela, art. 11, 1990-09-28 official text · verified 2026-10-30
7. ICE purchase contracts must be ratified by the regulator, and purchase tariffs need prior express fixing by ARESEP; ICE buys only the surplus left after the producer's own needs.Ley 7200, Ley que Autoriza la Generación Eléctrica Autónoma o Paralela, art. 13 to 15, 1990-09-28 official text · verified 2026-10-30
8. Chapter II lets ICE buy a further 15% on top of the article 7 limit from private hydro, geothermal, wind and other non conventional plants in blocks of up to 50,000 kW, only through public tenders with price competition; contracts last at most 20 years and the plant passes to ICE free of cost and liens at the end.Ley 7200, Ley que Autoriza la Generación Eléctrica Autónoma o Paralela, art. 20 to 22, 1995-05-09 official text · verified 2026-10-30
9. Contract holders are subject to Costa Rican law and the contentious administrative courts; foreign companies must set up a domiciled branch meeting the 35% capital rule and waive diplomatic claims.Ley 7200, Ley que Autoriza la Generación Eléctrica Autónoma o Paralela, art. 26, 1995-05-09 official text · verified 2026-10-30
10. Private generators enjoy the same import exemptions as ICE for machinery and equipment to conduct water and to generate, control, transform and transmit electricity.Ley 7200, Ley que Autoriza la Generación Eléctrica Autónoma o Paralela, art. 17, 1990-09-28 official text · verified 2026-10-30
11. ARESEP regulates and fixes tariffs for the supply of electricity in generation, transmission, distribution and commercialisation; MINAE grants the authorisation to provide that public service.Ley 7593, Ley de la Autoridad Reguladora de los Servicios Públicos, art. 5, 1996-08-09 official text · verified 2026-10-30

Worked example

  • A foreign developer plans a 40 MW wind farm costing US$50,000,000 (about ₡22,741,000,000). At 40 MW it cannot use a Chapter I concession (20 MW cap), so it must win an ICE public tender under Chapter II. It forms a Costa Rican company or domiciled branch with at least 35% Costa Rican capital, posts a US$2,000,000 environmental guarantee during construction (1% or US$500,000 thereafter) and signs a contract of up to 20 years, after which the plant passes to ICE at no cost.

Step by step

  1. Check ICE's generation expansion plan and whether a tender or eligibility window is open.
  2. Structure the project company with at least 35% Costa Rican capital.
  3. Obtain the water concession where needed and environmental viability from SETENA.
  4. Apply to ICE for the eligibility declaration (Chapter I) or bid in the public tender (Chapter II).
  5. Obtain the ARESEP concession and have the purchase contract and tariff approved.
  6. Post the 4% guarantee at contract signing and reduce it to 1% one year after start of operation.

Common traps

  • The 35% Costa Rican capital rule applies to the generator and to foreign branches; a 100% foreign SPV does not qualify.
  • Chapter II plants transfer to ICE free of charge at the end of the contract, so the tariff must recover the full investment within the term.
  • ICE sells all output; private generators cannot sell to end users under Ley 7200.
  • Distributed generation for self consumption is a separate regime (Ley 10086) and Ley 7200 concessions cannot be used for it.

Sources

Related pages

Related: Costa Rica country profile · live dashboard · central bank and release calendar · our posts on X

← Key regulated sectors in Costa Rica and who regulates themRooftop solar and self consumption in Costa Rica: distributed energy resources under Ley 10086 →

Get rule changes weekly

Free. One email a week from The LatAm Thread.

One more step after you press the button: we take you to Substack, where your email is already filled in. Confirm there to start. No spam, unsubscribe anytime, we never share your address. By subscribing you agree to the privacy policy.