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M.Sc.

Thesis

Analysis of the Technical Potential and Profitability of Photovoltaic in Costa Rica


Analyse des Technischen Potentials und der Rentabilitt von Fotovoltaik in Costa Rica

Written by:

Toni Helmut Weigl


Student Number: 03625683
Submitted to the: Lehrstuhl fr Energiewirtschaft und Anwendungstechnik Technische Universitt Mnchen, to Prof. Dr. rer. nat. Thomas Hamacher

In cooperation with: Cmara de Industrias de Costa Rica Co-Supervisor: Bernhardt Johst (Cmara de Industrias de Costa Rica) The 30th of January, 2014

Kurzzusammenfassung
Costa Rica ist ein aufstrebendes Entwicklungsland, welches bis 2021 klimaneutral sein mchte. Deshalb strebt das Land bis zu diesem Zeitpunkt eine Stromversorgung an, welche zu 100 % aus erneuerbaren Energiequellen besteht. Die Voraussetzungen fr die Stromerzeugung aus Wasserkraft, Windkraft, Biomasse und Geothermie sind in Costa Rica hervorragend und werden zu einem Groteil auch schon genutzt. Mit Einstrahlungswerten von 1 700 bis 2 100 W/m/Jahr sind die Bedingungen auch fr die Nutzung von Solarenergie erstklassig. Das genaue technische und wirtschaftliche Potential der Fotovoltaik (PV) in Costa Rica wird in dieser Arbeit untersucht. Dafr ist zunchst ein gutes Verstndnis der momentanen Energiesituation und den politischen Rahmenbedingungen von Nten. Um das technische Potential beruhend auf der Einstrahlungssituation des Landes zu untersuchen, werden verschiedene Einstrahlungsdatenquellen von Boden und Satellitenmessungen verglichen, validiert und verwendet. Die Satellitendaten von SolarGIS1 zeigten sich dabei als hochwertigste Datenbasis um PV-Systeme fr Haushalte und Firmen zu dimensionieren. Damit kann der zu erwartende energetische Ertrag erstmals hinreichend genau berechnet werden, um eine Wirtschaftlichkeitsanalyse durchzufhren. Mittels einer umfassenden Analyse der Installations- und Betriebspreise von PV sowie der Strompreise, wird die Rentabilitt der Systeme in den verschiedenen Stromtarifen untersucht. Durch die hohen Einstrahlungswerte und die steigenden Strompreise ist die Netzparitt auf Verbraucherseite in Costa Rica schon erreicht. Auch der signifikante Beitrag, den Solarstrom zum Strommix des Landes leisten kann, ist abschieend diskutiert.

Abstract
Costa Rica is an emerging country which aims to produce its electricity only from renewable sources by 2021 to become the first CO2 neutral country. The environmental conditions in Costa Rica are excellent for the use of water, wind, biomass and geothermal energy to generate electricity. This potential is therefore already highly utilized. Irradiation values ranging from 1 700 to 2 100 W/m/year also indicate outstanding conditions for the profitability of solar electrical systems. This thesis analyzes the technical potential of photovoltaic (PV) systems profoundly and also investigates the economic value of solar electricity. Primarily, the actual energy system of the country, as well as the political framework of the energy sector, is studied. To evaluate the technical potential for solar electricity, a reliable irradiation data base is identified. Therefore different sources of ground measurement data as well as satellite date are compared, validated and then utilized. The data from SolarGIS 1 proved itself to be the most accurate and valuable. With this data, PVsystems for residential and commercial buildings could be dimensioned precisely for the first time and the expected electricity yield could be calculated. Through a wide analysis of the installation- and operation costs of PV systems and the electricity prices, the profitability of the systems is examined. The main finding of the present report is that the good irradiation conditions and the high electricity prices have already established grid parity on the consumer side in Costa Rica without subsides. Finally, if several megawatts of solar capacity penetrate the market, it will also influence the energy mix of the country as will be demonstrated. This shows the significant contribution which solar energy can make for Costa Rica.
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SolarGIS is a geographical information system with a high-resolution online solar database operated by GeoModel Solar. More information can be obtained at http://solargis.info/

Erklrung
Hiermit erklre ich, Name: Weigl Vorname: Toni Helmut Matr. Nr.: 03625683

dass ich die beiliegende Master Thesis zum Thema: Analysis of the Technical Potential and Profitability of Photovoltaic in Costa Rica (Analyse des Technischen Potentials und der Rentabilitt von Fotovoltaik in Costa Rica) selbstndig verfasst, keine anderen als die angegebenen Quellen und Hilfsmittel benutzt habe, sowie alle wrtlichen und sinngem bernommenen Stellen in der Arbeit gekennzeichnet und die entsprechende Quelle angegeben habe. Vom Lehrstuhl und seinen Mitarbeitern zur Verfgung gestellte Hilfsmittel, wie Modelle oder Programme, sind ebenfalls angegeben. Diese Hilfsmittel sind Eigentum des Lehrstuhls bzw. des jeweiligen Mitarbeiters. Ich werde sie nicht ber die vorliegende Arbeit hinaus weiter verwenden oder an Dritte weitergeben. Einer weiteren Nutzung dieser Arbeit und deren Ergebnisse (auch Programme und Methoden) zu Zwecken der Forschung und Lehre, stimme ich zu. Ich habe diese Arbeit noch nicht zum Erwerb eines anderen Leistungsnachweises eingereicht. Mnchen, 30.1.2014

.................................................. Toni Helmut Weigl

Acknowledgement
Above all, I would like to thank all of the people who have helped me with the development of this thesis and supported me throughout the entirety of my studies Univ.-Prof. Dr.rer.nat. Thomas Hamacher for his supervision of my thesis, for his interesting discussions and for the great assistance from his Institute for Energy Economy and Application Technology at the Technical University Munich. Bernhardt Johst for the opportunity to work on such an interesting project and the great framework conditions he provided in Costa Rica. Furthermore, I would like to thank him for all of the assistance, contacts and motivation he provided during the preparation of the thesis. my colleagues from the Cmara de Industrias de Costa Rica, the Acesolar and the GIZ: Katja Frick, Mximo Fernandes, Prof. Carlos Meza, Jorge Blanco and Irene Caas for all of the great teamwork throughout the preparation of the thesis and for the very helpful discussions. the institutions that provided me with data, including the Instituto Meteorolgico Nacional de Costa Rica, GeoModel Solar, the Earth University, the Instituto Tecnolgico de Costa Rica (ITCR) and the Instituto Costarricense de Electricidad (ICE). the people and companies who helped me understanding the Costa Rican energy market and the opportunities and challenges of solar systems during several meetings. Not to forget here: Alexandra Arias (ICE), Mario Alvarado (ACOPE), Prof. Dr. Shyam Nandwani, Geilyn Aguilar (BCIE), Mara Cristina Araya (IMN), Universidad de Costa Rica (UCR), Elvatron, Pura Sol, Juwi, Sibo, Intitech, Swisssol and Greenergy world. my friends, Marco Lindner and Yurun Garca Rangel, for their assistance with the English language. Sincere thanks are given to them. last, but not least, my parents, my brothers and the rest of my family for their emotional support during my studies and for their assistance with all of my life decisions thus far.

List of abbreviations
Acesolar ACOPE AHK AM ARECA ARESEP BCIE BOO BOT CENCE CICR CNFL Costa Rican Association for Solar Energy Association of Private Electricity Generators in Costa Rica German Chamber of Commerce Air Mass Accelerating Renewable Energy Investment in Central America and Panama Public Services Regulatory Authority Central American Bank for the Economic Integration Build Operate Own Build Operate Transfer National Center for the Control of Energy Chamber of Industries of Costa Rica National Power and Lighting Company (Electricity distribution company) Cooperativa de Electrificacin Rural Alfaro Ruiz COOPEALFARO (Electricity distribution company) Cooperativa de Electrificacin Rural de Guanacaste COOPEGUANACASTE (Electricity distribution company) Cooperativa de Electrificacin de San Carlos COOPELESCA (Electricity distribution company) Cooperativa de Electrificacin Rural Los Santos COOPESANTOS R.L. (Electricity distribution company) ESMAP Energy Sector Management Assistance Program of the World Bank ESPH Empresa de Servicios Pblicos de Heredia (Electricity distribution company) GAM San Jos Metropolitan Area GDP Gross Domestic Product GIZ German Society for International Cooperation HIT Heterojunction with Intrinsic Thin Layer HVDC High Voltage Direct Current ICE Costa Rican Electricity Company IMN National Metrological Institute IRR Internal Rate of Return ITCZ Intertropical Convergence Zone JASEC Junta Administradora del Servicio Elctrico de Cartago kWh Kilowatt hour kWp Kilowatt peak LPG Liquefied Natural Gas MINAE(T) Ministry for Environment and Energy (and technology) PR Performance ratio PV Photovoltaic RECOPE Petroleum refining companies of Costa Rica ROI Return on investment SIEPAC Central American Electrical Interconnection System STC Standard Test Conditions ITCR Costa Rican Institute of Technology UNA National University

Table of Content
1 2 2.1 2.2 2.3 2.4 2.4.1 2.4.2 2.4.3 2.4.4 2.5 2.5.1 2.5.2 2.5.3 2.6 2.6.1 2.6.2 2.6.3 2.6.4 2.6.5 3 3.1 3.1.1 3.1.2 3.2 3.2.1 3.2.2 3.2.3 3.2.4 3.3 3.3.1 3.3.2 Introduction ................................................................................................................... 10 Situation in Costa Rica ................................................................................................... 14 Location and Population................................................................................................ 14 Energy Consumption ..................................................................................................... 15 Important Institutions in the Energy Sector .................................................................. 17 Electricity Generation System ....................................................................................... 19 History of the Legal Frame ............................................................................................ 19 Electricity Mix in 2012 ................................................................................................... 19 Development of the Electricity Mix ............................................................................... 20 Electricity Price Increase in Recent Years ...................................................................... 22 Transmission and Distribution Grid ............................................................................... 23 SIEPAC Power Line ......................................................................................................... 23 Transmission Grid .......................................................................................................... 24 Distribution Grid ............................................................................................................ 25 Current Situation of Solar Energy .................................................................................. 26 Electrification of Rural Areas with PV............................................................................ 26 Decentralized Electricity Generation Plan Piloto Generacin Distribuida ................. 27 1 MW PV Power Plant Miravalles .................................................................................. 28 Installation Companies for Photovoltaic ....................................................................... 28 Outlook and Aim of the Ministry of Environment ......................................................... 29 Irradiation in Costa Rica ................................................................................................ 30 Description of the Weather Situation in Costa Rica ...................................................... 30 Different Climatic Regions and Specific Weather Conditions in Costa Rica [44] .......... 30 Comparison to Germany ............................................................................................... 31 Irradiation Data ............................................................................................................. 31 Available Datasets of Irradiation ................................................................................... 31 Comparison of Long Term Irradiation Measurements .................................................. 33 Validation of Data from Recent Years for Specific Sites ................................................ 36 Maps of Solar Irradiation ............................................................................................... 39 Yield Analysis of PV Systems in Costa Rica .................................................................... 41 Specific yield of PV Systems in the Central Valley ......................................................... 42 Estimated Specific Yield for all Climatic Regions in Costa Rica...................................... 43

3.3.3 3.3.4 4 4.1 4.2 4.2.1 4.2.2 4.2.3 4.2.4 4.3 4.3.1 4.3.2 4.3.3 4.3.4 4.4 4.4.1 4.4.2 4.4.3 4.4.4 4.5 4.5.1 5 5.1 5.2 5.3 5.4 6 7

Influence of Seasons on the PV Electricity Production.................................................. 44 Influence of the Azimuth Angle on Performance .......................................................... 45 Profitability of PV Electricity in Costa Rica .................................................................... 48 Legal Framework and Boundary Conditions for PV systems ......................................... 48 Price of PV Systems and the Produced Electricity ......................................................... 50 Specific Installation Costs of PV Systems ...................................................................... 51 Maintenance Costs for PV Systems ............................................................................... 51 Capital Costs and Other Influence Factors .................................................................... 52 Price of Solar Electricity in USD/kWh ............................................................................ 52 Profitability of Self-Consumption for Households in the Residential Tariff .................. 55 Household 1: Small Apartment with Low Electricity Consumption .............................. 56 Household 2: Row House with Medium Electricity Consumption ................................ 57 Household 3: Single-family House with High Electricity Consumption ......................... 58 Summary of the Observation in the Residential Tariff .................................................. 58 Profitability of Self-Consumption for Companies in the General Tariff ........................ 60 Electricity Price in the General Tariff ............................................................................. 60 Company 1: Service Agency with an Electricity Consumption below 3 000 kWh/month ....................................................................................................................................... 60 Company 2: Fabricating Company with an Electricity Consumption Greater than 3 000 kWh/month ......................................................................................................... 61 Summary of the Observation in the General Tariff ....................................................... 63 Profitability of Self-Consumption for Industries in the Medium Voltage Tariff ............ 65 Exemplary Calculation of a Company Connected to the Medium Voltage Grid ........... 67 Influence of PV on the Electricity Mix ........................................................................... 70 Electricity Mix of Costa Rica at the Moment ................................................................. 70 Electricity Mix of Costa Rica without Thermal Power Plants ........................................ 72 Influence of Solar Power on the Daily Load Curve ........................................................ 73 Influence of PV Electricity on Future Electricity Generation Costs ............................... 75 Resume and Recommendations .................................................................................... 78 Summary and Outlook ................................................................................................... 82

Bibliography........................................................................................................................................... 86 List of Figures......................................................................................................................................... 92 List of Tables .......................................................................................................................................... 94 Appendixes ............................................................................................................................................ 95

1 Introduction
Costa Rica is a country with excellent climatic circumstances for the use of renewable energies as water, wind and solar power. Furthermore it is rich of energetically usable natural resources like biomass and geothermal heat for example. Water and wind energy as well as geothermal heat are the main power sources for the electricity generation in Costa Rica at the moment. The share of solar power is still largely underrepresented in the electricity mix, considering the location of Costa Rica in the tropical belt. However, at the moment the country generates approximately 91 % of its electricity demand from renewable sources. Therefore the question most people would ask is: why should they change anything in their energy mix, if they are already among the countries with the greenest and cleanest electricity productions in the world? The answer is that Costa Rica is a developing country and its demand for electricity grows constantly. Every year new capacities have to be installed to cover the rising demand. Unfortunately, the number of profitable sites for new hydro and geothermal power plants is decreasing, and most plants require extensive environmental- and socialacceptability studies. For this reason the use of diesel and heavy oil increased massively in recent years [1]. This raise is not only the case for Costa Rica but also for all countries in Central America at the moment [2]. To reverse this trend, more environmentally friendly power plants have to be used in the future. Especially to fulfill the target set by the government, to be carbon neutral and to have an electricity generation based only on renewable sources by 2021 [3]. Lots of polemic is penetrating the electricity market at the moment about how to solve these problems in the future. The Costa Rican Electricity Company (ICE) wants to increase the share of hydropower again by using also sites with relatively high generation costs, as done for example at the Pirris hydroelectric power plant [2]. This includes locations in environmentally protected areas where many background studies are necessary. The Petroleum Refining Companies of Costa Rica (RECOPE) and powerful industrial representatives claim that liquefied natural gas is the only solution to cover future demands, at least for the next few years [4]. On the other hand, supporters of geothermal energy want to extract more energy from the several volcanos. Therefore, they want permission to install geothermal power plants in several natural parks of Costa Rica. ACOPE, the Association of Private Electricity Generators, and the Acesolar, Costa Ricas Association for Solar Energy, recommend using solar power to lower the electricity prices again [5], [6]. Jorge Blanco from the Acesolar stated at the national energy forum: to forget about the energy crises and just start to build up an extensive network of solar power plants. [6]. Only in one aspect they all agree: the rising share of petroleum derivatives used for electricity generation is bad for the environment and drives electricity prices to unacceptable levels for Costa Ricas industry and population. Certainly the solution will not be one of these technologies but a combination of them, and the price will be one of the decisive elements in favor of one technology or another. Different studies and irradiation maps show the enormous potential of solar energy in whole Central America. Costa Rica was stated there with average irradiation values between 1 650 and 2 200 kWh/m/year, which equals also the average of Central America [7]. These average irradiation levels are twice as high as the ones in Germany [8]. However, the range is so wide that the actual

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1. Introduction quantity of the potential could yet not be identified. This is one of the reasons why solar electricity generation is not considered a major element in the energy outlooks of all the countries. This study investigates the technical as well as the economic potential of solar power to enable Costa Ricas electricity production to become 100 % renewable again. So far solar systems produce less than 0.1 % of the nations electricity. However, for Costa Ricas location close to the equator, solar power could be used extensively throughout the whole year. Also the momentary development plan almost neglects this renewable energy source, as the national electricity company ICE considers the technology as not competitive at the moment and also not in the near future, for its high investment costs [2]. Within the development plan a number of only 205 panels is declared to be the goal for 2021 [3]. This amount has already been achieved, but the good irradiation conditions and the reduced prices for solar systems permit a significant increase of this number. The first step is to know about the current situation of the developing country, regarding its location, the important institutions and the present legal frame work conditions as the Plan Piloto of ICE. This pilot project permits injecting excess electricity, generated from renewable sources, into the electricity grid. The current consumption and production of electricity and its development as well as the status quo of the solar industry is important subsequently. For Costa Ricas location it is obvious that the irradiation conditions are significantly better than in Germany. For the so-called micro climates, however, a prediction of the solar irradiation and the PV output has to be based on a dense measurement grid with high quality. To obtain an accurate result, a broad data acquisition is necessary, which in Costa Rica is far more difficult and time consuming than in industrialized countries like Germany or the USA. This study has obtained and analyzed different datasets, including ground measurement data from the National Metrological Institute (IMN), two universities (EARTH and ITCR) and satellite data from SolarGIS and the NASA. The comparison of the different datasets and the evaluation of these with measurements of existing photovoltaic (PV) systems is used to validate the data sources. With this solid and wide database of solar radiation it is possible to estimate the PV output of new systems at its specific locations. Another problem constantly associated with PV are the costs. By the population and many decision makers, solar electricity generation is believed to be far too expensive to be competitive in the market without subsidies. To verify this, the economic value of solar electricity is examined for different scenarios. In this context, the study will focus on the prices of PV systems at the moment and relates it to the electricity prices paid by the customers in different electricity tariffs. This includes example calculations of the cash flow associated with the systems of various cases to state the profitability of each of them. Temporal correlations of production and consumption as well as political framework possibilities as the Plan Piloto of ICE, are taken into account for these analyses. Not only the customers of the distribution grid operators could take advantage of the high irradiation values and the low system prices but also private and state owned electricity generation companies. With a large penetration of PV electricity, from systems distributed throughout the country, they could lower the generation costs and minimize the carbon footprint of Costa Rica through less use of fossil fuels. The actual benefits and influence on the electricity mix of Costa Rica are shown. Finally, the summary and the conclusion should eliminate all questions and prejudices which are in the heads of Costa Ricas population, company owners, electricity generators and decision makers.

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1. Introduction

General Information
Energy situation Legal framework Current status of solar

Market Research
Prices of PV-systems

Irradiance Condition
Analysis of the Acquisition of weather irradiance data Validation of recieved data

Cost of electricity

PV - Yield calculation

Solar irradiance map

Profitability Calculations
Households Small companies General tariff Large industries Medium Voltage tariff

Side Effects
Influence on electricity matrix Influence on the electricity price

Residential tariff

Resume
Summary Recommendations Outlook

Figure 1.1: Scheme of the study and its main investigated topics.

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1. Introduction

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2 Situation in Costa Rica


2.1 Location and Population
Costa Rica is located in the southern part of Central America, between the coordinates 8 15 11 00 North and 83 30 86 00 West. This area is considered to be within the tropical belt of the Northern Hemisphere. In the north, the country borders with Nicaragua and in the south with Panama, in the east and west it is surrounded by the Caribbean Sea and the Pacific Ocean, respectively. With an area of 51 100 km and a population of approximately 4.67 million people it is not even as big as Bavaria and relatively small compared to Germany [9]. The area of Bavaria is about 30 % bigger than the surface of Costa Rica. More than 60 % of the population is concentrated in, or closely around, the capital San Jos, which is located in the center of the country. This area is called San Jos Metropolitan Area or Central Valley in English and the Gran rea Metropolitana (GAM) in Spanish. In the following it will be referred to it as Central Valley or GAM. Surrounded by mountains it is the heart of the Costa Rican industry. The rest of the country consists mainly out of national parks and agricultural businesses. The country is divided in seven states; Guanacaste, Alajuela, Heredia, Limn, Cartago, San Jos and Puntarenas as shown in the different colors in Figure 2.1. The area that is considered the Central Valley is indicated by the black contour.

Figure 2.1: Displays the map of Costa Rica and its states, with the Gran rea Meteopolitana (GAM) indicated by the black contour.

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2. Situation in Costa Rica Although the industry in the GAM is quite strong, Costa Rica is still one of the less developed countries [10]. One of the examples for the status of development is that the streets in the center of San Jos have just had street signs since the last months of 2012 [11], so landmarks are still used more frequently for giving directions than the names of the streets. The streets throughout the whole country are mostly in bad conditions compared to Germany but relatively good compared to other Latin American countries. More than 25 % of Costa Ricas surface is covered by national parks where the nature is unusually well preserved. This ecological land use and the Latin-American culture are some of the reasons why Costa Rica has the happiest population on the planet according to several statistics [12]. Costa Rica is also ranked highest combining the happiness of the population, the life expectancy and the ecological footprint [13]. Furthermore, Costa Rica has not had an army since 1949, and therefore, has had more money to invest in education and social security, which has had a very beneficial impact on the country. Regarding electrification, the country is also already quite advanced and provides more than 99 % of its population with electricity. These are some of the reasons why many people migrate to Costa Rica. About 10 % of the population is of immigrant origin, but it is assumed that approximately 1 million Nicaraguans live legally or illegally in Costa Rica. Although divergence of the rich and the poor is notable and around 20 % of Costa Ricans live below the poverty level, the middle class is quite strong. Furthermore, the equality of man and woman is much better than in other Central American countries.

2.2 Energy Consumption


In the last 10 years, Costa Ricas population has grown by more than 20 % and is expected to keep growing similarly in the coming years as well. At the same time, its economic development has also been very fast, and the gross domestic product (GDP) of Costa Rica has doubled in the last 10 years. These two factors resulted in a vast increase in the energy consumption. The total energy consumption of Costa Rica increased from 1990 until 2010, from approximately 18 GWh to more than 42 GWh. This increase of more than 130 % in just two decades has mainly been driven by the increased use of hydrocarbons for transportation, as more than 80 % of the used petrol in Costa Rica is consumed by the transportation sector [1]. While in 1997 the car density in Costa Rica was one vehicle for every 7.2 inhabitants, grew the ratio to one vehicle per 3.3 inhabitants in 2010 [14]. Estimations state a further average increase of 7.75 % per year until 2030 [14]. To reduce the CO2 emissions in this sector the promotion of electric vehicles and ethanol driven cars is planned, but will probably not change the situation in the short term. The total electricity consumption in Costa Rica in 2012 was approximately 10 TWh as shown in Figure 2.2 [16]. This is compared to Germany with approximately 600 TWh only a fraction of less than 2 % [17]. With an average annual increase of 5.3 % the demand of electricity has quadrupled in the last 20 years. In 2010 it accounted for 22 % of the total energy consumption. The financial crisis in the last years also influenced Costa Ricas industry, for its strong relation to the industry of the USA. In these years the electricity consumption stayed on a more constant level than before. However, various studies expect another vast increase of the electricity demand in the upcoming years [2]. In Figure 2.2 the three scenarios of the electricity increase in the next 10 years are observable, as predicted by the national energy company ICE.

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2. Situation in Costa Rica

Figure 2.2: Shown is the development of the Costa Rican net electricity generation since 1980, and three scenarios how it might evolve in the future [15] [2].

The major consumption of electricity in 2010 was made by the residential sector. The households consumed 40 % of the countrys electricity as shown in Figure 2.3. Costa Rica does not have a widely spread gas network, therefore most of the heat demand has to be covered with electric energy. Space heating is in most places not required, but the heat for cooking, the warm water for showers and washing machines is provided by electric boilers. Constant growth can be seen in the commercial sector, which has a 33 % share of the electricity consumption at the moment, and is a bigger consumer than the industrial sector. The industrial sector refers to the companies connected to the medium and high voltage grid. They lost share in recent years and currently consume 24 % of the nations electricity. Most of these companies are connected to the medium voltage grid of up to 34.5 kV. Only six companies have such a high consumption to receive their electricity directly from the high voltage grid. These six companies demand 3 % of the nationals electricity. The last 3 % are commonly paid for lighting in the streets, public parks and governmental buildings [2].

Figure 2.3: Depicted is the share of the electricity consumption in 2010 for each sector.

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2. Situation in Costa Rica

2.3 Important Institutions in the Energy Sector


The energy sector in Costa Rica is divided in three main sectors: Generation, Transmission and Distribution. The major tasks and businesses regarding the generation, control and distribution of electricity in Costa Rica are managed by four institutions: MINAE, ICE, CFNL and ARESEP as schematically shown in Figure 2.4. This section introduces these four institutions and explains their responsibilities. Furthermore, the ACOPE, that represents the private electricity generators, and the organization Acesolar, which is important for the solar industry, will be presented. On the political level, the Ministry for Environment and Energy, MINAE (Ministerio de Ambiente y Energa) is responsible for the planning of the national energy sector [18]. It takes general decisions, develops energy policies and sets laws to coordinate the energy sector. The MINAE has to make sure that the country fulfills the target set in 2007 by ex-president Oscar Arias Sanches to become CO2 neutral until 2021. The published National Energy Plan also requires the distribution companies to supply electricity to 100 % of Costa Ricas inhabitants by 2030. This can be done either by a connection to the national grid or with off-grid systems. The government held Costa Rican Electricity Company, ICE (Instituto Costarricense de Electricidad) has to respond to the targets set by the MINAE as well as the requirements of the market [19]. It is in charge of 76 % of the electricity generation and the complete transmission network. Also 78 % of the distribution grid is property of ICE. The company is vertically divided in the departments ICEGeneration, ICE-Transmission and ICE-Distribution. Besides operating the transmission systems of the country, ICE-Transmission also manages the imports and exports of electricity from neighboring countries (Nicaragua and Panama) in times of generation shortages or excesses. Although the grid of ICE-Distribution covers most of Costa Ricas surface, based on sales the main electricity distribution company at the moment is the National Power and Lighting Company, CNFL (Compaa National de Fuerza y Luz) [20]. The CNFL is not related to ICE in its business strategies, but legally 98 % of it belongs to the government hold company [14]. CNFL has the monopoly to operate de distribution grid of the Central Valley, where the energy demand density is by far the highest, therefore it sells more electricity than other operators although its monopoly area is smaller. All trades in the energy market are under the supervision of the control institution Public Services Regulatory Authority ARESEP (Autoridad Reguladora de Servicios Pblicos) [21]. It is responsible for the permission, regulation and control of private and governmental public service providers. No energy can be traded without the notice of ARESEP. It controls the quality and norms of the energy system and regulates the prices for the end customers in the monopoly based electricity distribution system. Apart from this, it is in charge of tariff regulations for electricity feed-in to the grid as well as all other tariffs as local and long distance bus fares for instance. It introduced fixed tariffs for private generators to sell electricity generated from water and wind energy. Up to know feed-in tariffs for electricity from solar energy and biomass are still missing but are in discussion.

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2. Situation in Costa Rica

Planification and Guidelindes from the Ministry for Environment and Energy

ACOPE Generation ICE Generation Private Generators Law 7508: BOT Private Generators Law 7200: BOO Distribution grid operators

Transmission

ICE Transmision

Distribution

ICE Distribution

CNFL

Municipal distributers

Cooperations

Regulation, Control and Pricing by ARESEP

Consumers

Residentials

Commercials

Industries

Others

Figure 2.4: Scheme of the energy sector in Costa Rica illustrating the relations between the institutions and companies.

The majority of private electricity generators are united in the Association of Private Electricity Generators in Costa Rica ACOPE, (Asociacin Costarricense de Productores de Energa). The association represents their members in discussions about the energy future of Costa Rica and supports them with providing a network for knowledge exchange. Furthermore, it organizes events and seminars and provides information and papers about the electricity generation in Costa Rica. The scheme of Figure 2.4 summarizes the institutions and illustrates the relations between them. The MINAE provides the legal framework and the targets for the whole electricity sector. ICE shares the generation task with the other distribution grid operators and the private generators, which are associated in ACOPE. The transmission of electricity from the power plants to the distribution grids is solely done by ICE, while the distribution is shared between nine companies and cooperation. As electricity is a public service, ARESEP defines the prices in each section from the generation until the consumption so the monopoly situation does not lead to unreasonable price increases. As long as ARESEP does not define a trading price for PV electricity this energy cannot be traded on the market. To change this situation, the Costa Rican Association for Solar Energy Acesolar (Asociacin Costarricense de Energa Solar) works on a suggestion for a solar energy tariff at the moment [22]. This organization was founded in 2012 and is already the most important, government independent, organization for the development of the solar industry in Costa Rica. Its members are besides others, the Chamber of Industries of Costa Rica (CICR) and German Chambers of Commerce (AHK), governmental electricity companies, several solar installing companies, universities and representatives of development cooperation as the German Society for International Cooperation (GIZ). Besides the feed-in tariff, the organization is also working on norms for the production and installation of solar systems. It has the target to push the growth and development of the solar industry in Costa Rica and the technology in general.

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2. Situation in Costa Rica

2.4 Electricity Generation System


2.4.1 History of the Legal Frame
Costa Ricas electricity sector used to be completely operated by the government until 1990. In this year important changes in the framework for electricity generation permitted also private investors to enter the market and allowed them to install up to 15 % of the national capacity [23]. Law 7508 improved the conditions for private investors furthermore, and added the possibility to install power plants with a Build Operate Transfer (BOT) contract of another 15 % of the national capacity. But still the private investors are limited to a maximum installation capacity of 30 % of the national demand, and 50 MW per investor or company [24]. Private investors can produce electricity from all renewable sources excluding the geothermal energy, as ICE still keeps its monopoly for this technology and the fossil fuels [25]. The central control agency of ARESEP gives the permissions for the extraction of energy resources and defines the prices for trading of electricity since then. At the moment the generation of electricity in Costa Rica besides ICE, is realized by nine public service companies and 29 private generators. In 2012 the installed capacity was 2.7 GW with a net generation of 10 TWh. The state owned company ICE operates 76 % of these plants. The other distribution companies operate 10 % and the private generator companies the rest of 14 % [26]. The maximum peak power demand in 2012 was 1 593 MW at 18:30 on a workday in late March. For the high share of renewable energies in the mix, this constant reserve capacity of more than 1 GW has to be maintained, because not all capacities are always available for the electricity production.

2.4.2 Electricity Mix in 2012


In 2012 the major part of the installed capacity was covered by hydroelectric power plants. They had held 63 % of the share, followed by fossil fuel plants (diesel, gas and cogeneration) with a share of approximately 25 %. Other renewable energies like geothermal, wind, biomass and solar energy together had a comparable low capacity share of 13 %, as shown in Figure 2.5 on the left. Due to the different hours of utilization of the technologies, the distribution of the energy share is slightly different; this is shown in Figure 2.5 on the right.

Figure 2.5: Depicted are the shares of the technologies regarding the installed capacity and the generated electricity in Costa Rica in 2012.

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2. Situation in Costa Rica The hydroelectric power plants with 72 % of energy share are followed by geothermal power plants with 14 %. Geothermal energy is the base load power plant technology of Costa Rica with a capacity factor close to 90 %. Although the fossil fuel power plants hold a relatively high share in the installed capacity, the share of generation remains below 10 % [27]. Due to its high costs they are only operated if no other technology is available to cover the demand. In contrast to the solar energy, which generates far less than 1 % of Costa Rica`s electricity, wind energy contributes with 5 % also a considerable amount of electricity to the grid.

2.4.3 Development of the Electricity Mix


Hydro power has always been the main energy source for electricity generation in Costa Rica. Its share and the usage of other technologies during the last three decades can be observed in Figure 2.6. The figure also gives an outlook on how the shares will evolve in the next ten years, based on the national energy outlook from ICE. After the construction of the big hydro power plant Arenal in 1979, Costa Rica supplied his whole population with electricity produced by hydro power plants. As the electricity consumption rose also in these years quite fast, already a few years later, in 1986, some electricity had to be produced by fossil fuels. In 1990 the electricity generation was fulfilled almost exclusively by hydro power again, since then its share has decreased constantly. The low share of fossil fuels around 2000 resulted from the vast increase in use of geothermal energy in the 1990s. The small wind power turbines that started to penetrate the market in the final years of the last century were also beneficial. In 2001, Costa Rica introduced tariffs for the feed-in of wind energy for private electricity generators, which attracted investors to develop the first wind power parks in Latin America. For nearly five years, all shares remained relatively static and kept the usage of fossil fuels on a low level of approximately 1-2 %. For the fast growing demand and the lack of further sites for geothermal and hydro power plants, peak loads could not be covered anymore. So the fossil fuels became more important again in recent years. During this time, the share of fossil fuels rose on average 1 % per year, to 9 % at the moment. However, most power plants in the country are still run of river power plants, and large scale storage hydro power plants. Wind and geothermal power plants have significant shares on the electricity production in contrast to the not yet used solar energy.

Figure 2.6: Shown is the change of used technologies for the electricity generation in Costa Rica since 1980 with the prediction until 2024 made by ICE.

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2. Situation in Costa Rica As the electricity demand will continue to grow in the upcoming years, the installed capacity and the produced electricity will have to be increased constantly. The energy plan of ICE predicts an average annual capacity increase of 4 % from 2011 to 2030. This equals a doubling of the 2 590 MW, which were installed in 2011, to more than 5 000 MW. According to the energy outlook, this will mainly be done by increasing the energy share of hydro power. The predicted demand increase and the planned power plants from ICEs expansion plan can be seen in Appendix 1 until 2021. The aim for hydroelectric power stations is to reach 80 % of share again. However, an unrestricted extension is not easy to obtain. At the moment approximately 25 % of the identified hydro potential of 6 500 MW is used. From the remaining potential, 780 MW are located in national parks where the nature is protected and the exploitation is not permitted. Another 25 % of the potential would directly or indirectly affect Indian-reserves where these massive interventions in the environment meet heavy resistance [2]. Hence, the actual potential that ICE identified for further electricity production reduces to be only 2 300 MW. From these, the majority are small power plants, which have higher specific construction costs and are not as profitable as the existing plants. Furthermore, in recent years the technology got less effective due to reduced rain intensity in Costa Rica, and Central America in general, due to the climate change. Panama for example, which has a large share of hydro power plants as well, already faces problems with supplying sufficient electricity in the dry season. Therefore, it has to buy expensive electricity from other countries by the use of the SIEPAC transmission line [28]. This changing climatic situation and the rising construction costs decrease the economic efficiency of water power [29]. In the development plan it is predicted, that thermal power plants will get a capacity share of 16 % to provide the necessary reserve capacity. As an extensive use of fossil fuels would stand in conflict to Costa Ricas ambitions target to become the first CO2 neutral country in 2021 a very low energy share of these power plants is desired. The energy share should remain below 5 % each year and on average below 2 %. For the reason of price the trend goes away from gas to a more frequent use of diesel right now, but Liquefied Natural Gas (LNG) could change the picture once more. The planned geothermal plants are just sufficient to maintain the share of nearly 12 % in the electricity mix. So far, already 76 % of the theoretical potential of high enthalpy geothermal power plants is used for electricity production [26]. New discussions are ongoing investigating the possibility of installing new geothermal power plants in parts of the national parks of Costa Rica, where most potential is located. As environmentalists are against these projects, the share of geothermal power will probably decrease in the future. Another option to use the geothermal energy is to exploit the potentials of low enthalpy geothermal power, which can be found in many places distributed over Costa Rica. In 2012 the relatively low feed-in tariffs for wind were increased slightly and led to more installations nowadays and probably a higher share in future years. A constant share of approximately 7 % is expected by ICE from 2015 onwards. The contribution of the renewable energies solar and biomass was not considered in the outlook of ICE. However, to make the electricity generation more diverse these technologies could play an important role in the next years, to avoid an increased use of fossil fuels in years with low precipitation or delays in the power plant constructions.

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2. Situation in Costa Rica

2.4.4 Electricity Price Increase in Recent Years


The specific electricity generation costs in new hydro power stations are increasing constantly as the most profitable rivers have already been used for electricity generation. Although some rivers still offer good technical potentials to install a power plant, these are suffering from resistance of the society and require many background studies. Environmental and social acceptability studies are time consuming and expensive. The increased generation price of Costa Ricas main electricity source and the increased use of fossil fuels let to a dramatic rise in the electricity prices in the last years, as shown in Figure 2.7. While the average price in 2003 was only 6.7 US cents per kWh, for 2013 it is estimated to be on average 19.6 US cents per kWh. This is an average increase of 12 % per year and almost a tripling of the electricity price. The inflation in these 10 years was on average 9 %, so considerable lower in the same time frame [30]. Even more drastic is the comparison in the last four years, in which the inflation was brought under control by the government. The resulted inflation was only approximately 6 % per year, but the electricity prices increased on average by 14 % per year. One major reason for the over proportional increase is the more frequent expensive electricity generation from fossil fuels. From the incomes for electricity generation in 2012, ICE spent more than 20 % on operating the thermal power plants with fossil fuels, but these plants only produced 8 % of the nationals electricity. This ratio will rise for low precipitation in 2013 even further. Therefore, electricity prices rose significantly in 2013 again. In January 2013 the price for residential customers rose by more than 11 % and in March it rose by almost 6 % again [31]. Other reasons for this long term trend are the expenses for operation and administration, which rose to more than 25 % in recent years [32]. In future years the prices are expected to increase further with a similar rate, if no dramatic changes are applied to the momentary system.

Figure 2.7: Shown is the average specific electricity price in US cents per kWh in Costa Rica over the last 10 years in black. The red curve is the trend line of the development curve [33].

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2. Situation in Costa Rica

2.5 Transmission and Distribution Grid


Different power grids are necessary to transmit the electricity from the power plant to the end consumer. Depending on the distance and the transmitted power, different voltage levels are applied. In recent years, parts the SIEPAC power line that connects six countries of Central America went into operation. Apart from this ultra-high power line, a transmission grid with 300 kV and distribution grid with voltages until 1 kV exist in Costa Rica. These are operated by ICE, but used also by different others companies, as explained in the following paragraphs.

2.5.1 SIEPAC Power Line


SIEPAC is the abbreviation for Sistema de Interconexin Electrica de los Pases de America Central what means in English Central American Electrical Interconnection System. This transmission line reaches 1 800 km from Guatemala until Panama and has a transmission capacity of 300 MW. It also interconnects the Central American countries Costa Rica, Honduras, Nicaragua and El Salvador, which are located in between, as displayed in Figure 2.8 [34]. These 230 kV transmission grid power lines were firstly discussed in 1989, however, they are still not in full operation yet. It is also planned to connect Mexico and Columbia with that power line through a high voltage direct current (HVDC) interconnection. This would be an important electrical link between the northern and the southern part of the American continent.

Figure 2.8: Map of Central America with the SIEPAC transmission line in blue [34].

This power line aims to level out periodic power shortages in different regions as well as optimizing the shared use of hydroelectric power. A reduction of electricity generation costs is desired in Central America as it is present in Central Europe. This line should create a competitive energy market and

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2. Situation in Costa Rica attract foreign investments in power generation and transmission systems in the future [34]. The grid is owned by the transmission companies of the six countries and 25 % private capital. The two electricity companies from Costa Rica that are involved in the project are ICE and CNFL. Until now Central America does not have a strong connection between the countries, as it is the case in Europe for example, so the production and demand has to be kept in equilibrium at all times for each country. This makes control measures more difficult. Exchanges with other countries are always expensive. So the country has to be considered disconnected or isolated from the other countries.

2.5.2 Transmission Grid


The transmission grid of Costa Rica reaches from border with Nicaragua (Peas Blancas) in the north until the border with Panama in the south (Paso Canoas), as displayed in Figure 2.9. It consist currently (2010) out of 1 187 km of 230 kV transmission lines and 726 km with 138 kV. The complete grid of 1 913 km is owned and operated only by ICE [25]. The total capacity of the substations is more than 8 000 MVA. This high power is required because most of the energy is consumed in the center of Costa Rica (in the GAM) but the biggest generation units are located in the northern and southern part of the country for more effective use of the hydropower. The locations of the installed power plants can be observed in Appendix 2. Although many stations are operating at their technical limits, the time of outage of the system is less than three hours per year [35]. For new wind and solar power plants in Guanacaste and northern Costa Rica, as well as for new hydroelectric power stations in the south an upgrading of power lines and substations is required. Especially the connection from the center of Costa Rica to the east is very weak where only two 130 kV lines transmit all the energy.

Figure 2.9: Transmission grid layout of Costa Rica with a detailed view of the GAM [25].

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2. Situation in Costa Rica

2.5.3 Distribution Grid


From the transmission grid the energy is transferred to the distribution grid, which has a length of nearly 21 000 km. The distribution and commercialization of the electricity in Costa Rica is the responsibility of the eight public service companies: Instituto Costarricense de Electricidad (ICE) Compaa de Fuerza y Luz (CNFL, owend by ICE) Junta Administradora del Servicio Elctrico de Cartago (JASEC) Empresa de Servicios Pblicos de Heredia (ESPH) Cooperativa de Electrificacin de San Carlos (COOPELESCA) Cooperativa de Electrificacin Rural de Guanacaste (COOPEGUANACASTE) Cooperativa de Electrificacin Rural Los Santos (COOPESANTOS R.L.) Cooperativa de Electrificacin Rural Alfaro Ruiz (COOPEALFARO)

Figure 2.10: Areas of operation of the distribution grid operators on the map of Costa Rica and their shares of area, clientes, and sales on the total electicity consumption in 2010.

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2. Situation in Costa Rica At the moment, every of these companies holds a monopoly position its area. Figure 2.10 shows the map of Costa Rica with the areas of the different distribution grid operators in different colors. As displayed in light green, the grid of ICE covers the largest part of the country. CNFL indicated in blue, operates in the Central Valley. These two companies are in charge of approximately 80 % of the market volume. Both companies have almost an equal share of sales, while CNFL serves only an area of 2 % of Costa Ricas surface, compared to 77.5 % of ICE [35]. All the other grid operators are municipal companies or cooperation, and operate in the states indicated by their name. The sizes of their grids are significantly smaller than the one of ICE as well as the number of clients and amounts of sales. The parts of the map that are displayed in dark green do not have any connection to a distribution grid. These areas are mountains, volcanos and national parks and are not populated; hence, these are not covered by the grid. Although not the whole area of the country is covered by the grid, more than 99 % of all Costa Ricans have excess to electricity.

2.6 Current Situation of Solar Energy


The total installed capacity of solar power is still below 2 MW in Costa Rica and represents less than 0.1 % of the national installed capacity. But for the reason of the location of Costa Rica, close to the Equator, the potential is enormous. Since the first drafts of irradiation maps from ICE were published in the 1980s, some programs and pilot projects were introduced in the energy sector, to enhance the use of solar energy. These activities and their results are subject of the following chapter.

2.6.1 Electrification of Rural Areas with PV


To fulfill the target of providing electricity to all the population in Costa Rica, ICE started to give small off-grid photovoltaic systems with a battery unit to families or communities where it was more expensive to extend the grid. The beginning of this program (Electrificacin Rural con Fuentes de Energia Renovables) in 1998, was also the first time solar energy was used for electricity generation in Costa Rica in a commercial scale. Until 2012 a total of nearly 2 700 PV systems have been given out to new ICE customers and therefore a total of 323 kWp has been installed [36]. The locations of these small systems can be seen in Figure 2.11, indicated by the red points. Included in the map, on the left is also a picture that shows the principle setup of the island system. ICE provides these units to their customers for a monthly payment of only 2 USD including free replacements of the battery. This low price is one of the reasons why the people, who receive these systems, do not take the necessary care of it. The battery is designed in order to use the inverter for a maximum of three hours per day, and 3 lights at night. With this limitation, the battery should have a lifetime of 5 years according to ICE. But most customers constantly over discharge the battery and do not allow it to fully charge up the first three days after installation as recommended. Many batteries already return to ICE after 2 or 3 years due to improper use of the system. Further problems are the contamination of the inverters due to insufficient sealing and installation mistakes. Only 20 % of the installed systems operated as good as expected. Unfortunately, this fact and the high costs of PV from a few years ago are stuck in the heads of Costa Ricans and block the solar industry to expand much quicker. [37]

26

2. Situation in Costa Rica

Figure 2.11: Shows the locations of ICEs off-grid PV systems for the electrification of rural areas, with a picture of the unit.

2.6.2 Decentralized Electricity Generation Plan Piloto Generacin Distribuida


To investigate the potential of decentralized electricity generation from renewable energy sources and its influence on the distribution grid, ICE started a pilot program with the name Plan Piloto Generacin Distribuida [38]. In the following it will be referred to this program as the Plan Piloto. It started in October 2010 with an initial duration of two years and a maximum power of 2 MW. This program provides customers of ICE-Distribution, with the opportunity to reduce their electricity bill by installing small electricity generation units on their houses or businesses for self-consumption. Excess energy of the renewable electricity generator can be fed into the grid of ICE in times of overproduction and taken out in times of shortages. These annual balances are guaranteed for a timeframe of 15 years. The electricity meter of the house practically just spins in both directions and the grid works as a lossless storage for the customer. The balance over the whole year is reset to zero on November 30th each year. At this point, excess energy cannot be transferred to the balance of the next year (beginning December 1st) nor will ICE pay the customer for any extra electricity generated. Also for this reason the maximum allowed installed capacity is equal to the electricity demand of the household or company over the last 12 months. The generators can use biomass, solar-, wind- or water energy to generate electricity, but until now more than 95 % of the installed systems uses solar energy.

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2. Situation in Costa Rica The program successfully stimulated the market and attracted investors; therefore, it was extended until 2015 and the total installable capacity was raised to 10 MW. From this capacity 1 MW is reserved for residential clients. By April 2013, a total of 74 clients (more than 80 % residential) with more than 500 kWp have already been connected to the distribution grid under the Plan Piloto [39]. ICE is already considering extending the installable power permitted by the program again, and other distribution grid operators are evaluating whether they will copy the program for their clients. Currently, ARESEP is thinking about introducing a similar plan for the decentralized power generation obligatory for all distribution grid operators. The questions of whether and when they will adopt the program have yet to be determined, and the extent of similarity to the ICE program also remains unclear. The MINAE exacted, that 5 % of all households will take part on the decentralized power generation until 2020.

2.6.3 1 MW PV Power Plant Miravalles


Apart from these two programs of ICE for the usage of photovoltaic for a decentralized power generation, one large scale PV power plant was constructed in 2012. This 1 MW plant was a donation of Japan to Costa Rica for good business relations. It is installed in Miravalles (Guanacaste), in the northern Pacific area, where the best irradiation conditions in Costa Rica can be observed. The development of the project was quite difficult due to lack of experience, missing radiation data and bureaucratic problems. Therefore the whole process took almost four years. The operation of the plant is the responsibility of ICE as well as the commercialization of the generated electricity [40]. The plant output, the irradiation and the ambient temperature is measured with a high resolution, but this data is kept confidential and is not accessible for academic investigations. The donated system was specified with a price of 9 million USD. The systems specific price of 9 USD/Wp originated from outdated prices for the Heterojunction with Intrinsic Thin Layer (HIT) modules from Sanyo. These were taken from 2008, when the planning started and spread through all news. This made the solar technology seen as very expensive by the population. In the last eight years ICE installed a total of another six small systems connected to the grid with a total capacity of 41 kWp [36].

2.6.4 Installation Companies for Photovoltaic


The first companies working with solar energy were Consenergy in 1997 and Swissol in 1999 [41]. For a long time they were almost alone in the market. Since 2010, the number of companies installing solar systems has risen from 3 to now more than 55. But most of the companies still lack of business. The most successful one at the moment is Purasol Vida Natural S.R.L.. Until October 2013 they had installed 44 projects with nearly 220 kW from which 90 % are under the Plan Piloto [42]. From the prospective of the installers the biggest problems are the missing knowledge of the population about solar technology and the missing support of the government and the ARESEP. The actual tariff uncertainty makes the search for investors for solar projects very difficult. However, they cannot only blame others for the lack of business as some of the installers are not experts with adequate of experience, the mistakes of these few brings bad reputation to the whole sector. Some of the missing know-how, for example knowledge about the different tariffs, they could gain by themselves, but technical and country specific training may be provided by the GIZ, the CICR or the Acesolar to improve this situation. Furthermore, to help clients to select a trustworthy installation company, one of these organizations could introduce an objective point of certification for PV

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2. Situation in Costa Rica systems. With a countrywide consistent form of certification, the installers could show standardized performance certificates to the clients and these could make better comparisons. Until that is realized installers can at least provide the contacts of former customers (if they agree to it) in the area so new clients can inform themselves.

2.6.5 Outlook and Aim of the Ministry of Environment


The national energy plan of the ministry aims to achieve 1.3 % of solar energy share on the electricity generation by 2030, which should equal 100 MW and 2.9 % of the installed capacity [1]. Furthermore, 10 % of all residential energy consumers should have domestic water heating systems with solar energy at that time. This is linked to norms for the use of solar energy in newly constructed buildings, which should be defined by 2020. Although this is already a target, the rising prices of fossil fuels, climate change and falling prices of solar systems could promote the solar energy much stronger than the plan estimates. The only requirement to have a massive increase in solar energy is the legal framework. If the grid is opened for feed-in of PV electricity from private investors, as it is the case for water and wind energy, the solar industry might see a vast increase in the upcoming years. The Acesolar works strongly on this aim.

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3 Irradiation in Costa Rica


3.1 Description of the Weather Situation in Costa Rica
Although Costa Rica is a relatively small country the climatic situation in the different parts of the country are very distinct. Cloudiness, temperature, humidity and precipitation vary largely throughout the country, for Cost Ricas topology. High mountains ranging up to more than 3 800 m and the influences of the two oceans on both sides split the country in five climatic regions: North Pacific, Central and South Pacific, Central Valley, Northern Zone and Caribbean Region. These zones have similar climatic circumstances but the weather can still vary significantly from town to town. Local effects as continues cloud coverage in valleys or on several mountainsides, create lots of micro climates. This makes the prediction of weather as well as irradiation conditions very difficult until impossible in a large scale [43]. Just the sunrise and the sunset vary very little through the regions and the year. The sunrise is always between 5:00 am and 6:00 am and the sunset between 5:00 pm and 6:00 pm. Hence the daylight times vary from 11:30 to 12:30 hours per day.

3.1.1 Different Climatic Regions and Specific Weather Conditions in Costa Rica [44]
The Pacific Region has a well-defined dry and rain season. In the northern part, the dry season corresponds to the winter months, from December until March, from which March is the driest and hottest month. In these months the majority of the days have a clear sky and the number of sun hours is close to the theoretical maximum. April and November are transition months to the summer in which rainy afternoons are more frequent. Due to the larger influence of the Intertropical Convergence Zone2 (ITCZ) the dry season in the Central and South Pacific Region is shorter and the possibility of torrential rains is given in July and August. The northern part receives more annual solar radiation for less rain and therefore has a higher potential for using solar energy. Close to the other shore, in the Caribbean Region, seasons are not that distinct. The weather there is affected by rain during the whole year. Just in February and March as well as September and October it is relatively dry, and the region has less precipitation. Therefore the average sun hours per year are lower than in the Pacific Region. The Northern Zone shows a similar weather profile to the Caribbean Region as it lies at lower altitudes as well. It is just characterized with slightly less solar irradiation. The Central Valley Region is influenced by both climates. While on lower altitudes the drier and warmer weather of the Pacific Region is predominant, on higher altitudes the conditions are more rainy and cloudy. Besides the rain caused by local convection, also the sudden and heavy rains of the ITCZ are present in the rain season from May to October.
2 Northwest and southeast trade winds converge in a low pressure zone known as the Intertropical Convergence Zone or ITCZ. Rising air caused from convection results in a plethora of precipitation. The location of the ITCZ varies throughout the year while it remains near the equator. The ITCZ over land ventures farther north or south than the ITCZ over the oceans due to the variation in land temperatures. [84]

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3. Irradiation in Costa Rica The two oceans and the mountain shape of whole Costa Rica are the reason for these distinct climatic conditions. The rain and their origin, the clouds, heavily influence the irradiation conditions, and the solar output. These facts of the National Metrological Institute of Costa Rica (IMN) show the need to analyze the solar conditions with a high spatial resolution to take local effects, as constant cloudiness in valleys and mountain fronts for instance, into account.

3.1.2 Comparison to Germany


In Costa Rica the average hours per day of direct solar radiation in the different regions ranges from 4.2 in the Northern Zone to 7.1 in the North Pacific Region. In comparison to Germany, where the values range from 3.5 hours in the Ruhr-area to 5.2 hours in Baden-Wrttemberg, the huge potential for solar power can be estimated [45]. With an average of approximately 3 400 mm of precipitation per year, Costa Rica has four times as much rain as Germany (850 mm per year) [8]. This makes the power generation from hydro power reasonable as well. Due to the location the average humidity per month in Costa Rica is constantly at 85 %. Also the temperature alternates little throughout the year. In the lowlands it varies between 15 degrees Celsius at night in winter and 30 degrees Celsius at daytime in summer [46].

3.2 Irradiation Data


3.2.1 Available Datasets of Irradiation
In 1956 the first heliograph was installed in San Jos to quantify solar irradiation. But the first time the irradiation conditions in Costa Rica were analyzed, dates back to 1984. At this time ICE created a map of Costa Rica with iso-lines which indicated the average sun hours of the year [47]. However, this map was not sufficient to estimate the output of a solar power plant. Besides the dataset of the electricity company ICE, which consisted of 23 meteorological stations, the IMN operated 13 meteorological stations at this time. Until now, more than 140 weather stations of the IMN have been equipped with irradiation sensors. At the moment nearly 70 of them are still in operation. In contrast to the data from ICE these data sets are available for free for academic use and can be purchased for commercial interests. The maximum resolution obtainable from the IMN is hourly data. Unfortunately has to be mentioned, that the measurement equipment is of low quality and was never recalibrated. Only when a sensor went out of function it was replaced by a new one. Therefore, the accuracy of the datasets has to be verified before usage. A summary of these data properties and the comparison to the other sources can be found in Table 1. Irradiation data with higher temporal resolution and quality is measured by the universities. Regrettably, the National University (UNA) never recorded their measured irradiation [48]. The EARTH University logs data only since beginning of May 2013, but with a high measurement frequency of 15 min per sample, using a Davis Wireless ProVintage2TM weather station, on their campus in Guapilis, approximately 70 km north-east of San Jos. From the Instituto Tecnolgico Costa Rica (ITCR) in Cartago slightly more continuously measured irradiation data has been obtained. There the same measurement devise is installed and set to a 30 min resolution. This device has been connected to a computer since beginning of April 2013.

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3. Irradiation in Costa Rica


Table 1: Comparison of properties of different irradiance data sources in Costa Rica.

Irradiance Institution Available Time Resolution Time of measurement Spatial resolution Measurement devise

Ground measurements Universities EARTH (Guapiles) ITCR (Cartago) 15 min/30 min < 1 Year 1 Station each New VintagePro2 weather station National Meteorological Institute(IMN) Hourly and Daily 2-30 Years 100 Stations Pyranometers (not calibrated regularly)

Satellite data NASA Solar GIS Monthly (*LTA) 30 min (*TS) 1999 to 2012 250 m(*LTA) 4 km (*TS) GOES East Satellite

Hourly 1979 to 2012 50 km

NOAA Satellite

*LTA: Long term average *TS: Time series


In addition to these ground measurements exists data measured by satellites. Data from the NASA (NASA Langley Research Center Atmospheric Science Data Center) is accessible through an open web server by longitude and latitude [49]. First measurements were taken in 1979 and it provides hourly data until today for the whole country. The only drawback of this data is the low spatial resolution of the satellite of 50 km. Hence, the values represent an average irradiation of an area of 50 km times 50 km, which is too big to represent a specific location, in a country with many microclimates. Therefore, this data can only be used for large scale tasks as analyzing the countrys overall potential, the influence on the electricity mix and transmission grid dimensioning. Also the development of the irradiation conditions in the last decades can be analyzed with this long term datasets, but the potential influences of the changing measurement equipment have to be taken into account. Furthermore, Meteotest sells irradiation data for Costa Rica. This data is calculated by interpolating the monthly sums of three ground measurement station from 1970 until 1980 by using the visible band of the GOES-Satellite. Data for a specific location can be ordered as hourly values for a typical year, which is calculated by a synthetic time series generation, or monthly mean values for several years. However, this data is not very reliable as they state themselves [50] and is therefore not considered in this study. Most promising satellite data was provided by the solar resource database SolarGIS of GeoModel Solar. Monthly long term average values (LTA) of global irradiation as well as the direct and diffuse fractions are provided by their software pvPlanner3. With this, it is possible to estimate the solar yield for almost any site on earth for different module types and shading situations. The irradiance data used in this program is from the GOES-East satellite images, representing the time from January 1999 until December 2012. The next update of the data is planned to be in the
3

pvPlanner is a yield estimation software of GeoModel Solar, which is based on the SolarGIS satellite data.

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3. Irradiation in Costa Rica beginning of 2015 with the values of 2013 and 2014. The time resolution of the primary measurements is 30 min and the spatial resolution is 4 km [51]. For Costa Rica, these raw data time series (TS) can be obtained from SolarGIS for a specific site for the last seven years. The license for the web based software and the raw data can be purchased on the GeoModel Solar website. For academic use a discount for the license and the data can be negotiated directly with SolarGIS. These obtained satellite datasets will be compared with the ground measurements in certain locations to verify its accuracy. Although four sources of data were identified it should be noted that it is much more difficult to obtain high quality irradiation data in Costa Rica than in Western Europe. The German weather service (DWD) for example can provide high quality data from nearly 1 000 ground measurement stations within a comparably short processing time. Also the irradiation data and models in PV software have been validated multiple times to estimate the output most accurate. Furthermore, many operators of solar plants share their irradiance and yield measurements for investigation purposes. For the high installation density and the frequent use of monitoring web servers in Germany, comparable PV systems can usually be found easily.

3.2.2 Comparison of Long Term Irradiation Measurements


The obtained the long term measurements of the IMN and the NASA are compared primarily, to observe climate change phenomena often stated in Costa Rica. The other data sources cannot be included in this analysis as they do not provide annual data series for a large number of years. Fluctuations between the different years, general trends as well as the influence of calibration and the change of measurement equipment are examined in this analysis.
Table 2: Indicated are the measurement periods of the long term measurement stations of the IMN at the examined locations. The red points indicate these locations on the map. Weather Zone North Pacific Northern Zone Central Valley Central Pacific Caribbean South Pacific Station Name SANTA CRUZ LA REBUSCA FABIO BAUDRIT DAMAS LIMON COTO 47 Manual Measurements Start 1984 1971 1963 1983 1969 1985 End 1995 2005 2002 1999 2000 1997 Automatic Measurements Start 1995 2005 1997 2008 End 2013 2012 2013 2013 For all zones available from 1979 until 2012 Satellite Data of NASA

no measurements 1997 2009

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3. Irradiation in Costa Rica As described in chapter 3.1.1 the mountain chain in the center of Costa Rica and the two oceans on both sides heavily influence the weather and divide the country in five main weather sections. This is also valid for the general irradiance conditions. For this reason, long term measurement periods with monthly data of one reference weather station in each of the five zones was obtained from the IMN to compare it with the satellite data at these locations. In Table 2 the locations of the stations and their operation times are shown. First ground measurements were taken in 1963, and the satellites began their operation in 1979. The ground measurement data from the IMN had to be revised carefully as many temporarily failures let to unusual high or low values. All these false values were eliminated prior to the analysis and missing values filled with the long term average. Shown in Figure 3.1, are the trajectories of the yearly irradiation energy in kWh/m/a with respect to time in the five weather zones, for both measurement technologies. Observed primarily in the comparison, are higher fluctuations within the different years in the ground measurements than in the satellite data. The satellites spatial measurement resolution is with 50 km quite low and therefore evens out fluctuation stronger than the reference sensors on the ground. However, each curve shows overall constant behavior with the exception of the ground measurements in the Caribbean Region. This curve shows significantly higher values in 1996 than before, and shortly later the device in Limon stopped working. Less rain and more sun, which was observed by supporters of solar power in the Caribbean Region, could not be affirmed by higher irradiation values in the satellite data [52]. As the IMN predicts higher precipitation intensities for this area than some years ago, this might have been a very local effect, and people thought it has been representative for the whole area [53]. In addition to the measurements, the average of all ground measurement stations is plotted into both figures in red, as well as average of the satellite measurements in black. Slightly higher irradiation values in the satellite data are observed during the first measurement years, but in the last decade they coincided with the data measured on the ground. On average, the deviation between the two average values is below 10 % seen over the whole measurement period. Since 2000, the deviation has never exceeded 8 % and stayed on average below 3 %, which is well within the measurement uncertainties of the devices. In general, the irradiance in all zones fluctuated in different years but on average the irradiance values of both measurement technologies are coinciding. Due to the multi-replacement of the satellites, the used irradiation measurement devices changed regularly. The same technological improvement happened to almost all ground measurement stations, as they got upgraded from manual to automatic devices. At the station of Fabio Baudrit in the Central Valley the manual and the automatic station were operated besides each other from 1997 until 2002. The comparison shows that the measurements of the two sensors have an average deviation of less than 5 %. Also in the other datasets no jumps at the time of replacement were identified. Hence, the equipment change did not have a significant impact on the irradiation curves and can therefore be neglected.

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3. Irradiation in Costa Rica

Figure 3.1: Displayed are the irradiation curves of the five representing weather zones in Costa Rica, measured on the ground (top) and by satellites (bottom). The average of the ground measurement stations is displayed in red, and the average of the satellite data in black, to see the correlation between the measurement technologies.

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3. Irradiation in Costa Rica

3.2.3 Validation of Data from Recent Years for Specific Sites


The long-term analysis shows that the differences between the NASA data and the ground measurements of the country are on a low level, and both state that the climate situation stayed very constant during the last 30 years. For this reason, estimations of the PV yield for the lifetime of a solar system can be made sufficiently accurate by using averaged irradiation data of the last 10 years. This permits to take the data of SolarGIS in consideration for calculations of the PV yield. The spatial resolution of the wide dataset of the NASA is not sufficiently high to be representative for a specific point on Earth, therefore it cannot be used for the output calculations of individual PV systems. The IMN and the universities do not have a sufficiently dense grid of sensors to provide for this task neither, but these can be used to verify the accuracy of the satellite data of SolarGIS at specific points. SolarGIS is the only source that provides irradiation values in every location in Costa Rica with high spatial resolution. Most precise ground measurement data was obtained from the two universities; EARTH and ITCR. Therefore their half-hourly data is compared with the corresponding data of SolarGIS at both sites. As monthly average values of the last 13 years are not comparable with ground measurement data from only one year, time series of the satellite data were requested and obtained for the locations of the universities for their period of operation. The same was done with the most useful stations of the IMN for a wider analysis. Both universities are equipped with a Davis Wireless Vintage Pro2TM Weather station. The included photodiode sensor for measuring the solar radiation ranges from 0 to 1800 W/m with an accuracy of 5 % with respect to the full scale [54]. As photodiodes are only sensitive for parts of the full solar spectrum, this calibration error is just applicable for clear sky conditions and will increase for cloudy days due to the changing solar spectrum. This uncertainty has to be taken into account when the data is used. Also the satellite data has some uncertainty, resulting from the satellite imagines, as well as the model to transform the imagines to irradiation values. These errors vary significantly with the time frame that is observed, as well as the climate and ground conditions. In Figure 3.2 the behavior of the uncertainties is shown for different thermopile pyranometer classes in comparison to the satellite data of SolarGIS. For hourly values the uncertainty of the satellite data is between 10 % and 45 % but more important are the values for monthly and yearly sums. There the uncertainty reduces to only 3 % in favorable conditions and 6 % for difficult terrain. In both cases, the satellite data is more accurate than measurements from second class sensors. This was verified by different institutes for several climate conditions in the world, also for latitudes similar to Costa Rica like in India [55]. In these reports, SolarGIS is claimed to be the most accurate source of satellite data worldwide [56]. For the low latitude and the warm climate without snow and ice the deviation of the satellite measurement is probably closer to the low uncertainty than to the high uncertainty for Costa Rica.

36

3. Irradiation in Costa Rica

Figure 3.2: Comparison of the uncertainties of different sensor types and reasons for uncertainties of SolarGIS data [57].

In the detailed comparison of the measurements of the ITCR with SolarGIS, the measurement deviations can be observed. Figure 3.3 shows both measured irradiation curves for one week in April 2013 in Cartago. The satellite data approximates the shape of the ground measurements very exact on clear sky days as the April 16 as well as on days with constant cloudiness as the April 16, 2013. The influence of different clouds is calculated with low error. Just in some occasions an under- or overestimation occurs in the afternoons but this levels out within the week to a difference of only 6 %. In the compared four months, SolarGIS stated in total 15 % more energy from the sun than the ITCR. However, in the three months in which the corresponding data was compared to the EARTH University, the satellite identified 17 % more irradiation than the ground measurement device. As these observation periods are very short and just from the summer months, this percentages cannot quantify the accuracy of the data but shows that the satellite approximates the individual daily irradiation shapes and fluctuations precisely.

Figure 3.3: Comparison of the irradiance ground measurement of ITCR (in blue) with satellite data of SolarGIS (in red).

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3. Irradiation in Costa Rica The IMN however, has the needed irradiance measurement stations, which were in operation for at least one year during the last seven years, for which satellite data from SolarGIS is available. The IMN claims to have recent data from almost 70 stations. However, just eight of them were identified to have at least one complete year of data, without unreal values or with obvious systematic measuring errors. The corresponding time series of hourly data were obtained from SolarGIS for these locations. The measurement equipment used on the ground is in five of the eight stations the Kipp&Zonen SPLITE sensor and in the other three stations the LI-Cor LI-200SZ sensor. The type of measurement device and the exact locations of the stations can be observed in Appendix 3. Both sensors are equipped with photodiode sensors, similar to the Davis devices at the universities. The sensors have an error band of 5 % from the calibration and a drift of 2 %/year. Furthermore the linearity until 3000 W has a maximum deviation of 1 %. Adding up these sensor errors of the photodiode sensor the accuracy of the measurements is comparable with second class thermopile pyranometers in clear sky conditions [58] [59].

Station Available Time Average ground measurement Average satellite measurement of SolarGIS Difference Years kWh/m kWh/m %

Airport San Jos 5 1674 1982 16%

Airport Limn 1 1712 1593 -8%

Airport Puntarenas Chirrip Liberia 4 1820 2004 9% 1 2048 1906 -7% 1 1914 1741 -10%

Laguna Negro 1 1553 1579 2%

Quepos 3 1656 1926 14%

Rio Claro 1 1495 1756 15%

Figure 3.4: Annual difference between the ground measurements of the IMN with the satellite data of SolarGIS in percent.

The deviation of the annual irradiation measured by the two data sources can be seen in the table in Figure 3.4. The biggest deviations appear at the airport in San Jos where the satellite estimates 16 % more irradiation than the ground measurements. In some locations the ground measurement indicates more irradiation, in others SolarGIS does so. Hence, a systematic deviation cannot be identified. Summing all deviations of the eight stations, SolarGIS identified only 4 % more irradiation than the devices of the IMN. But as none of the measurement devices is perfectly exact, the actual irradiation value can only be assumed to be between the two measurements. As several international agencies and publications state that the measurement uncertainty of SolarGIS is lower than 6 % and the sensors on the ground have a deviation of 10 %, the actual value can be assumed to be closer towards the value of the satellite data than to the data of the IMN.

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3. Irradiation in Costa Rica Unfortunately, a better validation and an error band definition are not possible at the moment, as ground measurements with higher accuracy do not exist in Costa Rica. SolarGIS searches for data measured with secondary standard class sensors, to validate their model for the latitude and climate conditions in Central America, but so far none of these pyranometers is installed. ICE is planning to buy high quality equipment in the future, to further investigate the solar potential. Optimistically, they will share this valuable information with SolarGIS to provide countrywide irradiation data with even higher accuracy. Furthermore, Costa Rica could participate in the Energy Sector Management Assistance Program (ESMAP) of the World Bank. This program is designed to support developing countries to analyze their renewable energy potential [60]. This includes support to install high quality irradiance sensors, for verifying satellite based models, for a more accurate solar irradiance mapping of the world.

3.2.4 Maps of Solar Irradiation


In 2002 and 2006, Jaime Wright from the National University of Costa Rica (UNA) analyzed the datasets of 25 irradiance measurement stations of the IMN and ICE. In addition to these pyranometers, 38 heliographs, which only recorded the duration of sunlight, were evaluated in 2002. The Kriging4 technique was used to create maps of monthly mean values of global irradiation of the 63 reference points. From these monthly maps an annual map, which is depicted in Figure 3.5 on the left, was derived. Estimated irradiation values from another 17 heliographs were added to the database in 2006 to create a finer map with a total of 80 reference locations, which is shown in Figure 3.5 on the right. This additional imprecise data lowered the accuracy of the database further. The periods of measurement of the stations are very diverse; they reach from only one year up to more than 25 years. Some stations were in operation in the sixties, others in more recent years. On average the measurement period was from 1976 until 1988. Hence, the data is approximately 30 years old and the measurement devices were never recalibrated. Today, only a few stations are still in operation. Although the variability of the climate does not permit a very accurate and reliable result with this limited data source, the maps give a first approximation. In the maps the irradiation conditions are indicated in MJ/m per day. To convert this unit to kilowatt hours per square meter and year (kWh/m/a), which is most frequently used in Europe, the values have to be divided by 3.6 MJ/kWh and multiplied by the number of days per year. The first study observed annual mean irradiation values of 1 000 kWh/m/a to 2 000 kWh/m/a depending on the location. Monthly means of daily irradiation oscillated between 3 kWh/m/day and 6.7 kWh/m/day [61]. Highest values were found in the North Pacific Region and the western part of the Central Valley, as shown in Figure 3.5 on the left. Persistent cloudiness reduces the solar radiation in lower altitudes. In the revision, in 2006 a finer interpolation with more estimated data of the heliographs was used. It shows irradiation values of 400 kWh/m/a as well as very high irradiation values of 2 000 kWh/m/a in just 100 km distance, visible in Figure 3.5 on the right. Although high irradiations were identified, the use of photovoltaic was stated as not feasible in Costa Rica [62]. Until now, these monthly maps have been the only irradiation approximation for Costa Rica from ground measurements.

Kriging is a geo-statistical estimator to interpolate values for unobserved locations in a random field of sample measurements [93].

39

3. Irradiation in Costa Rica

Figure 3.5: Shown are the maps of annual solar irradiation for Costa Rica, estimated by Jamie Wright in 2002 (left) and 2006 (right) in MJ/m/day.

In the software pvPlanner of GeoModel Solar, data for the whole country is available in sufficiently high resolution, to create a map of satellite data similar to the maps from the old ground measurements. As SolarGIS cooperated a lot with this study, they created a new map from their irradiation data and published it on their website in the middle of August 2013 [63]. The resulting map of the yearly sum of the global horizontal irradiation can be seen in Figure 3.6. To create this map, not only the high resolution measurement data was used, but also the topologic conditions taken into consideration. The mountain peaks, which always hold the clouds, are shown in green and blue, indicating lower irradiation values in comparison with the lowlands. In comparison to Germany, where the map of SolarGIS as well as the German Weather Service (DWD) and Meteonorm state maximum values of 1 300 W/m/a for entire country, the irradiation conditions in Costa Rica are extraordinary [63] [64] [65]. For comparison, the map of SolarGIS for Germany is displayed in Appendix 4. Best locations can be identified in the SolarGIS map of Costa Rica, as in the map of Wright, in the region of Guanacaste, which is the peninsula in the north-western part. The southern Pacific Region and the Central Valley show in parts similar irradiation conditions as Guanacaste. Just on the eastern side of Costa Ricas mountain chain, the values are slightly lower. But the stated 1 700 W/m/a are still outstanding conditions to invest in solar energy. Differences between the two coasts are as low as 15 %. The map provided by SolarGIS is a big improvement to the map based on the data of the sun duration hours of heliographs made by Wright. The area of high potential for solar energy can be identified much more precisely. But since the validation of the data in chapter 3.2.3 has shown that the values stated by ground measurements are on average slightly lower, the quantity of solar irradiation taken from the maps has to be used carefully. To avoid overestimations of the yield, a reduction might has to be taken into account, when calculating the systems. This necessity and the quantity will be analyzed in the following chapter by comparing the simulated and the actual output of existing solar systems in Costa Rica.

40

3. Irradiation in Costa Rica

Figure 3.6: Depicted is the map of yearly global horizontal irradiation in Costa Rica, created by using data from the resource data base SolarGIS from satellite data.

3.3 Yield Analysis of PV Systems in Costa Rica


Few PV systems in Costa Rica are equipped with monitoring devices of Enlighten. This monitoring system is integrated in the micro inverters of Enphase Energy. With this online monitoring tool the daily electricity generation of each module can be evaluated. Most of the systems and their data can be viewed at the website www.solar.cr. As almost all, are located in the Central Valley around San Jos (GAM), a profound analysis of the yield of PV systems can be performed there, by using 15 reference systems. The first two systems were equipped with monitoring devices in March 2011, and since then the number of analyzable systems has increased constantly. Six south-facing systems have already been in operation for more than one year. With these, the annual distribution of the electricity production in the Central Valley can be determined. Additional eight systems of CNFL were installed in the final months of 2012 and operated for at least half a year at the time of evaluation. These, similarly mounted, 14 systems serve for yield comparison of the software estimation and the reality. Finally, the azimuth influence is investigated on the real data of the PV system at the Lutheraner Church, which has modules on the south and north side of the roof.

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3. Irradiation in Costa Rica

3.3.1 Specific yield of PV Systems in the Central Valley


The specific yield (YSpec.), also called Final Yield, of a PV system, represents the energy output of the plant in a predefined timeframe with respect to its maximum output power at Standard Test Conditions (STC). This equals the number of hours in which the system operates on its nominal power. This is commonly known as the Full Load Hours of the system. The specific yield is calculated by summing up the produced electricity (EProd.) in the observed period in kWh and dividing it by the installed peak power (PPeak) of the plant in kWp. Therefore the unit is kWh/kWp. If not indicated differently, the investigated period is one complete year. [66]

( )

The map in Figure 3.7 shows the locations of the 14 PV systems in the GAM that are orientated towards south; the table indicates the specific yield of each system and the simulated value for that location. To compare the yield estimation of satellite data with real measurements, the visualized layout of the PV system on the roof and the detailed electrical string interconnection is not required. Therefore the use of PV system design software like PVsyst, PV*SOL or others is not necessary. The yield estimation from GeoModel Solars online tool, SolarGIS pvPlanner, which is based on satellite data, is sufficient for the comparison with the real values. As previously identified, the global irradiation in the Central Valley varies between 1 800 and 2 000 kWh/m per year, which is significantly higher than in Germany, therefore higher values of the specific yield can be expected as well. Nevertheless, due to higher temperatures, the Performance Ratio (PR) reduces, and higher losses have to be taken into account. Consequently, the yield is not proportional higher in Costa Rica, but still significantly. Specific yields of 1 400 to 1 600 kWh/kWp per year can be observed in the Central Valley. Interesting are the wide fluctuation in the irradiance conditions and the output in just small distances of 20 kilometers. This is caused by the influence of local clouds and micro climates in the valley. Contrary to the statements of solar opponents, in none of the locations in the Central Valley the PV yield is reduced gravely.
Real Estimated Difference Specific Yield Specific Yield [%] [kWh/kWp] [kWh/kWp] 1 598 1 590 1 576 1 570 1 561 1 547 1 540 1 506 1 476 1 453 1 398 1 395 1 517 1 540 1 546 1 645 1 550 1 565 1 561 1 528 1 581 1 622 1 552 1 538 1 574 1 567 -4 % -3 % 4% -1 % 0% 1% -1 % 5% 10 % 7% 10 % 13 % 3%

Location of the PV System Bansbach, San Jos Cointica, Escaz Cariari, San Antonio Rohrmoser, Pavas San Rafael, Alajuela Moravia Coronado, San Isidro Rio Oro, Santa Ana Santa Lucia, Heredia La Uruca Barrio Lujan, San Jos San Rafael, Santa Ana Average Costa Rica

Figure 3.7: Shown is the Map of the GAM with the locations of the PV systems equipped with measurement devices, and the specific yield of the systems compared to the estimated one of SolarGIS.

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3. Irradiation in Costa Rica The comparison of the estimated and the real specific yield shows just very small deviations. Only in San Rafael (Santa Ana) the estimation based on satellite data was more than 10 % higher than the real production. The average real specific yield of the eight systems was 1 517 kWh/kWp per year. Compared with the average estimation of 1 567 kWh/kWp an overestimation of just 3 % is identified. This is a very exact prediction. However, the inclusion of a safety factor of 5 % is recommended to calculate the output rather more conservatively than risky. For all further calculations this yield reduction of 5 % is applied to the values taken from the pvPlanner for a bottom up calculation of the profitability. This leads to an average final yield of 1 488 kWh/kWp pear year in the Central Valley. In 2012 the specific yield in Germany fluctuated from 900 kWh/kWp, at the northern shore, to 1 100 kWh/kWp close to Stuttgart [67]. So the yields in the Central Valley are approximately 50 % higher than the German average. Even in Bavaria, which is the state of Germany with the highest irradiation values, significantly more PV modules are required to produce the same electricity than a system in the Central Valley.

3.3.2 Estimated Specific Yield for all Climatic Regions in Costa Rica
Most of Costa Ricas population lives in the Central Valley, and most of its industry is located there as well. As the electricity demand density is the highest there, this is the most important zone for electricity generation close to where it is required. Excellent irradiation conditions and high output values have been verified already in the previous chapter, which makes solar energy a promising option in the GAM. However, also representative values of the specific yield for the neighboring zones are important for the countrys electricity production with photovoltaic. Each of the five climatic zones indicated by the IMN is represented by five reference points as indicated by the map in Table 3.
Table 3: Shown is the average specific yield of the 5 climatic zones taken from the pvPlanner for the locations indicated in the map.

Zone North Pacific Region Central and South Pacific Region Central Valley Caribbean Region Northern Zone Average

Specific yield [kWh/kWp] 1 524 1 435 1 488 1 288 1 222 1 390

At these locations the specific yield was calculated from the SolarGIS data with the pvPlanner and the average of the five sample points taken, to estimate the corresponding yield for each zone. The previously recommended safety index of 5 % is applied to all software results. As seen in the map of the irradiance conditions, the North Pacific Region has the best solar yields. With 1 524 kWh/kWp

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3. Irradiation in Costa Rica per year the conditions are slightly better than in the Central Valley and the Central and South Pacific region. The output in the other two zones, in the northern part of the country and at the Caribbean coast, is 15 % lower than at the Pacific coast. To balance the electricity network and level out climatic fluctuations, it would be important to also make use of this lower but still high solar potential.

3.3.3 Influence of Seasons on the PV Electricity Production


For the location of Costa Rica in the tropical belt, the seasons, summer and winter, are not as defined as in Germany or Europe. So the solar production fluctuates only slightly through the year. Figure 3.8 shows the specific production of solar electricity in the five different climate zones of Costa Rica for each month. The same representative stations as in the previous chapter, indicated in Table 3, are used. For comparison also the real values measured in the Central Valley of the six reference systems, which are in operation for more than one year, are included in dark blue. The satellites tend to underestimate the solar production in January and February, which are the driest months of the year. In the rain season when the clouds dominate the weather profile SolarGIS slightly overestimates the yield but this levels out on the annual balance. The regions along the Pacific coast, which are displayed in red and orange, have a similar development as the Central Valley. These areas have higher electricity outputs during the months from December until April than the rest of the year, when the sky is barely covered with clouds. These months represent the dry season in central and western Costa Rica, which coincides with the winter season in the Northern Hemisphere. Although Costa Rica is located on the Northern Hemisphere, the solar output distribution is contradictory to the one in Europe. In Costa Rica, the most important reduction factor of solar yield is cloudiness during the rainy season. In Germany by contrast, the changing Air Mass (AM), which the sunrays have to cross in summer and winter, is decisive. For the close location to the equator, the sunrays cross the atmosphere of the Earth all year around almost perpendicular in Costa Rica, so the Air Mass is not changing significantly. Hence, it is not a substantial factor for the irradiance fluctuation. However, thick rain clouds reduce the solar irradiance more frequent than in Germany. From May to November heavy rains that last from 30 min to a few hours occur frequently and cover the sky in dark blue. At these times the production of the PV systems is drastically lower, but the average underproduction in the rainy season is only 25 % compared to the dry season in central and western Costa Rica. The fluctuations caused by the cloudiness in Costa Rica are not as strong as the influence of the Air Mass in lower latitudes as for example in Europe, where the difference of summer and winter is substantially. On the other side of Costa Ricas mountain range, the distribution of the dry and wet seasons is not so distinct. More precisely, the solar electricity production in the Northern Zone (green) and the Caribbean coast (yellow) evolves almost contrarious. In the summer months, the production is slightly higher than in winter. This contrary trajectories result in even lower fluctuations of the solar production for the countries average. The bars in gray in Figure 3.8 indicate these averages. The fluctuation results to be as low as 20 % and opposes the production of hydro power in Costa Rica. The PV has its highest production when the main electricity source of Costa Rica suffers from the drought and energy storages are depleted or fossil fuels burned to cover the electricity demand, therefore solar energy would serve as a perfect counterpart.

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3. Irradiation in Costa Rica

Figure 3.8: Depicts the specific yield per month in the five climate zones of Costa Rica estimated by SolarGIS. The real measurements of six systems in the Central Valley are included in dark blue and the bars in gray indicate the average of all regions.

3.3.4 Influence of the Azimuth Angle on Performance


The Shell Solar Sun Path diagram for San Jos, which is shown in Figure 3.9, shows that the most favorable orientation of solar modules is facing to the south as it would be orientated towards the sun the main time of the year. Nevertheless, the very vertical radiation, which is present almost the entire year close to the equator, permits to orientate the modules also in other direction without dramatic losses. At noon time in April and September, the suns elevation equals 90, in the months between April and September the sun even has higher elevation angles than 90 with respect to the south. These orientations of the sun would favor PV modules facing to the north in these months. The quantity of losses and surplus energy resulting from the azimuth angles of the modules will be examined by analyzing an existing PV system in the following. To receive the highest yield in with these sun elevation angles, an almost flat mounted system is most favorable. The optimum search algorithm of pvPlanner recommends between 9 and 13 of inclination of the solar modules with an azimuth of 0 with respect to the south. The yield increase from a one or two axis tracking did not show to be cost effective and therefore is not considered in the following analysis. Another advantage of the high sun elevation angles immediately after sunrise is, that shades from surrounding buildings and trees are less crucial than in lower latitudes.

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3. Irradiation in Costa Rica

Figure 3.9: Presented is the Shell Solar Path diagram for San Jos, Costa Rica. The lines indicate suns position for every hour of the year. The elevation of the sun is indicated by the distance to the center. The azimuth angle of the sun can be observed by the radial angle. A more detailed description of the diagram can be found in Appendix 5.

All PV systems analyzed until now were orientated with an azimuth of 0 with respect to the south, as this the most profitable orientation in the Northern Hemisphere of the Earth. The losses resulting from an orientating of modules in another direction can be analyzed with the data of the Lutheran Inglesia (Church) in San Jos. It has 14 PV modules installed facing to the south as well as the 8 modules facing to the north; therefore the differences in yield depending on the orientation can be observed. In the dry season, from November until February, the modules on the southern roof have significantly more energy output, as shown in Figure 3.10. On average, the production of the south facing modules in these months is 26 % higher than the generation of the ones facing to the north. In the transition months March/April and September/October, the specific production on both sides of the roof is almost the same. But during the rainy season from May until September, the production of the modules facing north rises and surpasses the south facing ones in each month. The average additional production of these modules sums up to 15 % in these months. Only the significant higher absolute yields in January and February, when the direct radiation is the strongest, are responsible for the 6 % higher yield of the modules facing to the south, observing the whole year.

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3. Irradiation in Costa Rica

Figure 3.10: Compared is the specific daily yield of the modules facing to the south and to the north at the Lutheraner Church in the Central Valley of Costa Rica.

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4 Profitability of PV Electricity in Costa Rica


4.1 Legal Framework and Boundary Conditions for PV systems
In the previous chapter the high technical potential for PV was assured by excellent irradiation conditions. Final yields are extraordinary high in the entire country and fluctuate only slightly throughout the year. However, the economic value of this electricity generation method has to be verified. The best boundary conditions for renewable energies as PV exist in the distribution grid operated by ICE. There the Plan for Decentralized Generation (Plan Piloto Generacin Distribuida) allows customers who want to generate their own electricity, to connect their systems to the distribution grid and use it as a lossless storage as explained in chapter 2.6.2. This eliminates the need of batteries or other storage devices and makes the solar technology more competitive with the electricity prices from the grid. The following analysis will be based on the connection to this plan. PV systems apart from the connection to the Plan Piloto will briefly be mentioned as well, indicating the differences and perils. Nowadays, the calculations are only applicable in the areas of ICE distribution, but the extension of the plan to the whole country is desired by many institutions and is expected to be realized soon. ARESEP started to work on this extension in November 2013 but the result of the public audience has not been published yet. For the profitability analysis of self-consumption, the electricity price of the utility will be compared with the price per kWh associated with solar electricity. The electricity pricing system in Costa Rica is divided in four tariffs. The two non-commercial tariffs are; the Residential Tariff, which applies to all households and the Preferential Tariff for public institutions, as schools and churches for instance. Commercial establishments and small businesses are usually charged the General Tariff, and larger industries that connect to the medium voltage grid have a tariff called Medium Voltage Tariff. Due to the monopolistic distribution system, each distribution grid operator charges a different price for electricity. Because of missing competition, the prices vary significantly. As the Plan Piloto can only be applied in the distribution grid of the ICE, the electricity prices of ICE are used for the calculations. This represents the price for almost half of Costa Ricas population. The average prices of the other utilities are slightly lower than ICEs price in the Residential and the General Tariff. However, ICE provides a price for its industrial customers in the Medium Voltage tariff that is lower than the other electricity providers. ICEs price for the Preferential Tariff coincides well with the average [68]. All electricity bills include also a fee for public illumination and the fire department based on the electricity consumption. For the profitability calculations only the electricity prices are used, and the extra savings of 1-3 % of these charges are neglected. Additionally, the 5 % sales tax for residential customers as well as the 13 % sales tax for commercial consumers that the distribution grid operators add to the electricity bills is also not considered when calculating the savings obtained from the reduction of the electricity bill. All these simplifications make PV systems more profitable in reality than they are estimated to be. In contrast with Germany, residential customers are not the main target group for solar installations, due to economic and cultural differences. Solar systems, to produce electricity for self-consumption, have high initial costs, which most homeowners in Costa Rica cannot afford. Hence, they cannot

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4. Profitability of PV Electricity in Costa Rica reduce electricity costs in the long run. To obtain a loan from a bank, one has to fulfill many requirements, which make it very hard to receive. Without a long history of credit status, the BCIE is not willing to provide a loan at all [69]. Furthermore, life and financial planning of most families are not reaching that long. Companies, on the other hand, mostly have this forward looking planning and a history with a bank to receive a loan easier. Therefore the possibilities for the residential sector will be analyzed briefly before the commercial sector is analyzed in more detail. Different real consumption profiles were analyzed for each tariff to investigate all particularities. In order to make the results of all cases comparable, the city center of Alajuela was chosen for all calculations. It is located close to the Airport of San Jos and its coordinates are 10.0165 North and 84.2126 West, as shown in Figure 4.1. Nearly 19 % of Costa Ricas industry is based in Alajuela, with a large potential for further growth [70]. The potential of solar installations in Alajuela is high not only for the high industry and demand density, but also due to good irradiation conditions and the available space for large ground installations, which is unique in the Central Valley.

Figure 4.1: The Map shows the exemplary location for the calculations of the profitability of solar systems in different electricity tariffs. In the zoomed circle the exact location close to the airport can be observed.

For the weather and irradiation conditions in Costa Rica multi-crystalline silicon photovoltaic modules have the best cost-yield ratio [71]. This is also currently the most popular technology in the world [71]. Modules should be mounted with an inclination of 13 and an azimuth angle of 0 with respect to the south, in order to attain the highest yield. For roof mounted multi-crystalline silicon modules with this orientation the PV planer states a specific yield of 1 596 kWh/kWp per year in

49

4. Profitability of PV Electricity in Costa Rica Alajuela [72]. Mounting the modules free standing results in a yield increase up to 1 624 kWh/kWp per year due to the better ventilation of the air and lower resulting module temperatures. For the free standing ground installation costs of the used land have to be considered in the financial analysis. In this investigation the modules are assumed to be installed on the roof of the consumers, and therefore the price of land and any environmental impacts can be neglected. As indicated in the validation, presented in chapter 3.3.1, it is recommendable to apply a safety factor of 5 % on the yield values from the pvPlanner to avoid overestimation. Therefore the conservative value of the PV yield used for the following calculations is 1 516 kWh/kWp per year. In Alajuela, the dry season starts in December, just as in the entire country. From December until April the specific output values are above the annual average as shown in Figure 4.2. This is favorable with respect to the Plan Piloto. The annual balance is always set to zero on 30th November, so for constant load distribution the balance can be brought to positive values in the first months and then used in the rain season which corresponds to summer in the Northern Hemisphere, where Costa Rica is located. If the production distribution were reversed, the surplus energy would be lost through the cut in December, and missing energy would have to be paid.

Figure 4.2: Depicted is the monthly specific electricity production in Alajuela taken from the pvPlanner and modified with the 5 % safety margin. The red line indicates the annual average.

4.2 Price of PV Systems and the Produced Electricity


In this chapter, all costs associated with a solar system and their influence factors are described. The price of solar electricity depends mainly on the initial investment costs of the PV system and the total output during its lifetime. The costs of batteries were not included because they are not required for systems connected to the Plan Piloto. PV systems apart from the net metering plan are designed to reach a high self-consumption to make batteries unnecessary, as these would reduce the profitability significantly. Service and maintenance costs as well as costs of debits will be taken into account as well but are not the main price drivers of solar electricity.

50

4. Profitability of PV Electricity in Costa Rica

4.2.1 Specific Installation Costs of PV Systems


The installation costs of solar systems vary significantly with the system size, the type of module as well as the origin of the modules. From several local solar contractors the turnkey prices for different solar systems were requested and quotes, which they prepared for their customers, analyzed. Large price differences between the systems of a supplier using German modules and its competitors were identified. The average specific cost for a solar system, smaller than 2 kWp and equipped with crystalline modules, is 3.1 USD/W as indicated in Table 4. Slightly bigger systems applicable for residential customers with high demands and small businesses reach prices of 2.3 or 2.4 USD/W. For large systems in the range of one megawatt and more, the prices per installed Watt are as low as 1.8 USD/W. These low prices result from cheap Chinese PV modules, which are available for less than 0.6 USD/W at the moment. Inverters can be obtained for approximately 0.5 USD/W, and the remaining costs are for the rack, the cables and the labor.
Table 4: Summarized are the specific costs of photovoltaic systems in USD/W depending on the system size in Costa Rica.

Specific cost of PV systems kWp <2 2-3 3-6 6-20 20-100 100-1000 > 1000 USD/W 3.1 2.7 2.4 2.3 2.2 2.0 1.8

4.2.2 Maintenance Costs for PV Systems


As none of the installers was able to provide a price for service, cleaning and maintenance of the systems characteristic values from Germany were used to approximate these costs. If PV modules are installed with an angle bigger than 10, rain normally washes off dust from the modules frequently and maintains a clean surface of the modules to ensure a high efficiency [73]. Rains in Costa Rica are usually shorter than in Germany but are more intense and more frequent, making cleaning unnecessary except for special locations with considerable amount of dust. To regularly visually inspect the modules and also check the electric connections costs of 1-3 % of the initial investment costs are generally assumed to occur per year [74]. These costs include also small unscheduled repairs, but as fixed PV systems have no moving parts repairs are very unusual. The panels themselves are normally equipped with a 10 year product warranty and a 20 to 30 year power guarantee of 80 %. In order to obtain conservative results a lifetime of 20 years with a degradation of 1 % per year is applied. As the inverters normally have a shorter lifetime, the money for a replacement after ten years is taken into account with an additional investment cost of 0.5 USD/W ten years after the installation of the system. As a further inverter price decrease is probable, this is a conservative assumption as well.

51

4. Profitability of PV Electricity in Costa Rica

4.2.3 Capital Costs and Other Influence Factors


In most cases a PV system cannot be financed without a credit from a bank. In Costa Rica the interests for loans are quite high and the securities, which are required, as well [69]. From different banks the interest rate for financing PV systems was stated to be approximately 7 to 10 %. Furthermore, they require a maximum payback time of 8 to 12 years, depending on the creditability of the client, to provide a loan. The capital contribution of the client has to be at least 20 %. For the 80 % financed by the bank the client has to provide sufficient securities to obtain the loan. The modules and the inverter are taken into account with only 20 % of their value, so that the client has to present a mortgage, a pledge or a guarantee from a bailer for the rest. As many people face financial concerns from this, the project Acelerando las Inversions en Energa Renovable (ARECA) assists Central American investors by providing the necessary securities [75]. They cover up to 75 % of securities that the client has to present for an interest rate of only 1.5 %. However, each client will receive different interest rates from its bank and different requirements would be applied, for its specific risk potential. Therefore, the capital costs to finance the system are not included in the calculations of the profitability of the projects to make them comparable. As USDs are frequently used in Costa Rica besides their official currency, the Colon, all following prices and costs are indicated in USD. Prices that were obtained in Colons, as for instance the electricity prices from the utility, are converted to USD with an exchange rate of 500 Colons per USD in this study. Although the actual exchange rate fluctuates slightly ( 2 % in the last year), this is the usual value for all conversions inside the country. To calculate the net present value of future cash flows, the cost of capital used is 6.25 %. This consists of a 3.25 % prime rate for USD in Costa Rica and a risk factor of 3 % for the country [76]. This value is also used to compare the internal rate of return (IRR) of the solar project, with the interest of a loan from a bank or other investment options. For the calculations of the savings in the first year, the electricity prices of ICE from October 2013 are used. These prices are slightly lower in comparison with the ones from July 2013, yet they provide the best representation of the annual average. For future years a very conservative price increase of only 5 % is assumed. This value was commented by the president of the energy commission of CICR with the words We wish! [77] in October 2013, as they expect even higher price increases in the future. The profitability is therefore expected to be significantly higher than calculated conservatively in this study.

4.2.4 Price of Solar Electricity in USD/kWh


The stand out cost of a solar system is always the installation price. People or institutions that want to use the electricity for self-consumption are intimidated with knowing the price of the investment for a solar system. As they cannot transfer this price to the specific electricity price, which they know from the utility, the actual financial benefit of the system cannot be seen. Electricity generating companies and banks that have financed power plants already, compare the PV systems with the parameters of conventional technologies. They mainly use the Capacity Factor or Factor de Planta (Fp) which represents the produced electricity (Eprod.) of the systems divided by the number of Hours per Year (HpY) and the installed Capacity (Cinst.) as shown in equation 2. The result is the percentage of the year in which the plant operates at full load.

52

4. Profitability of PV Electricity in Costa Rica

( )
This is just another way to indicate the full load hours of a plant. Hydro power stations have usually a capacity factor of 40 to 70 %, and that of geothermal power plants can reach 90 %. Solar systems without tracking systems however, do normally not reach values above 20 %. On average they have capacitor factors of approximately 16 to 17 %. The conventional plants in Costa Rica produce significantly more electricity than solar systems with the same installed capacity and make solar look ineffective. But this is compensated by the lower costs associated to solar systems in comparison to other technologies. Big PV power plants have specific installation costs of approximately 1.8 USD/W whereas the upcoming hydroelectric power stations are assumed to have a specific installation cost of 2.9 USD/W and more. The operation and maintenance costs are significantly higher as well. So in this comparison the solar power plants are more cost efficient. Consequently, neither the comparison of the installation prices nor the capacity factor of the power plants is meaningful. The only comparable value is the actual generation cost per kWh. This is not a fixed value for each power plant type but a dependent one, influenced by many factors, such as: fixed and variable costs, capacity, specific electricity production and the expected lifetime of the plant. All costs associated to the systems during its construction, operation and decommissioning are compared to the produced electricity during the lifetime of the plant. The expected specific generation price of each project is provided by ICE and the range of each technology summarized in Table 5. The planned hydroelectric power station will produce electricity at costs ranging from 7.6 to 16.2 US cents per kWh. For the high capacity factor new geothermal projects will produce electricity in the same price range. Slightly higher are the costs per kWh from wind power parks. Regarding the price, thermal power plants cannot compete with any renewable energy technology for the fuel costs. Costs of more than 0.50 USD per kWh are the result of high oil and diesel prices, a low utilization ratio and the low efficiency of the generators.
Table 5: Summarized are the prices for the electricity generation of ICEs planned conventional power plants for Costa Rica in US cents per kWh [2] [78].

Type of power plant Hydroelectric Geothermal Wind Fossil Fuels

Generation Price of Electricity in US cents/kWh 7.6 - 16.2 8.2 - 11.3 12 - 22 27.5 - 58

Expected lifetime in years 40 25 20 20

The price for photovoltaic systems has dropped significantly in recent years and the outstanding irradiation conditions benefit the specific price of solar electricity in Costa Rica. As ICE is not planning to install further systems at the moment, no estimated price for future systems can be found. The installation price of the power plant in Mirravalles of 9 USD/W is not up-to-date and cannot be used as reference; therefore the price for different locations and system sizes has to be calculated. Equation 3 is used to obtain the specific electricity prices (Cspec.) from PV systems. The specific

53

4. Profitability of PV Electricity in Costa Rica installation cost (Cspec. install.) of the system is divided by the total electricity produced by the PV system during its lifetime. Therefore the specific yield (Yspec.) of the system per year is multiplied with its lifetime (Tlife). The total maintenance costs (Cmaint.) per year are related to the output of the system per year and then summed up with the costs associated with the inversion.

[USD/kWh]
Cspec. Cspec. install. Yspec. Tlife Cmaint. Capinstall. : Specific generation cost of solar electricity : Specific installation price of the solar system : Specific yield of the PV system at the location : Assumed lifetime of the PV system (20 years) : Annual operation and maintenance costs of the system : Installed capacity of the PV system

( )
[USD/kWh] [USD/Wp] [kWh/kWp] [years] [USD/year] [kWp]

In these calculations the lifetime (Tlife) is assumed to be 20 years as this is the lowest PV module warranty on the market. A drop or an increase of this time would have a major influence on the result. Variations of the specific electricity price for different locations occur as the specific yield varies for each zone of the country. Changing the system size results in a large change in the specific installation price and therefore has an even bigger impact on the costs. Table 6 shows the variations of the input parameters for different scenarios in the blue shading, as well as the calculated specific electricity generation prices in US cents per kWh. The specific yield values for each zone are taken from chapter 3.3.2 where the 5 % safety factor has already been applied. It becomes apparent that, the lowest prices of specific generation are found by using large PV power plants in the in the North Pacific Region, where the highest irradiation values are present. The influence of the specific installation price turns out to be more important than the location of the system. Electricity generation costs of just 7 US cents significantly undercut all conventional power plants. Also in the demand center of the Central Valley and the South Pacific Region the electricity generation costs from PV power plants are lower than for new hydroelectric and geothermal power stations. The average cost of solar electricity produced by plants with a capacity of 1 MW and more is as low as 7.8 US cents per kWh. This price makes solar power plants competitive with the conventional power plants. Also large companies with high demands are able to generate their electricity at these low prices. Small and medium sized companies would have to accept a slight price increase as they cannot benefit from these low specific installation costs. However, an average of 9.1 US cents is still a very low price for electricity nowadays. The same can be said about small PV systems, which would normally be installed by homeowners, in a decentralized electricity generation scheme. Costs, varying from 10 to 13 cents per kWh, make the location of the solar system secondary compared with the prices from the utility.

54

4. Profitability of PV Electricity in Costa Rica


Table 6: Shown are the specific generation prices in US cents per kWh for solar electricity depending on the influence factors location and system size.

Prices in US cent/kWh Average specific installation price for PV in USD/W North Pacific Central Valley Central and South Pacific Caribbean Coast Northern zone

Specific Yield for the zone in kWh/kWp

Small systems (20 kW)

Medium size systems (20 kW- 1 MW) 2.1

Large PV power plants ( 1 MW) 1.8

2.65

1 524 1 488 1435 1 288 1 222

10.4 10.7 11.1 12.3 13.0

8.3 8.5 8.8 9.8 10.3

7.1 7.3 7.5 8.4 8.8

Average

1 390

11.4

9.1

7.8

4.3 Profitability of Self-Consumption Residential Tariff

for

Households

in

the

The first observed tariff is the Residential Tariff. The return on investment (ROI) for the customers is calculated to identify the moment when it becomes positive. This period corresponds also the breakeven point when the investment becomes profitable. Electricity bills for residential customers just consist out of two sections, both based on the energy consumption. For the first 200 kWh per month the customers of ICE pay 17.6 US cents/kWh as shown in Table 7. In comparison to Europe this is an acceptable low price, but in comparison to other Latin American countries this is already quite high. Residential customers of the middle and upper class often use more than these 200 kWh/month, for every additional kWh of electricity the price increases to almost 0.32 USD/kWh. This price is extremely high considering that it is almost the same as in Germany while the average salary in Costa Rica is less than a third [79]. This stepwise price increase should provide incentives for people to save electricity. A few residential households thus cook or even dry their clothes with gas. Most houses still cover their hot water demand using electricity, which makes up 40 % of the total electricity consumption, depending on the other electric devices installed in the house [80].

55

4. Profitability of PV Electricity in Costa Rica


Table 7: Indicated are the electricity prices for ICEs residential customers in 2013 in USD per kWh [68].

T1 Residential Price in USD/kWh First 200 kWh/month Every additional kWh/month Energy in kWh USD 0.176 USD 0.318

With a solar system people would generate its own electricity and would become independent of the price from the utility. The savings arising from this independency of the electricity provider serves as the income to calculate the recuperation of the investment costs of the PV system. The amount of electricity consumption varies widely in the country and an average load profile for the sector is not representative. Therefore the time of recuperation is calculated for three different cases with real consumption profiles. It is assumed that all three cases are located at the same location in Alajuela to make the results comparable. Furthermore, a connection to the Plan Piloto of ICE is taken as the basis for the annual calculations. The maximal installable capacity permitted under the Plan Piloto is limited by the annual demand of the household. The solar system cannot be designed to produce more electricity per year than the customer consumed in the last 12 months, so no excess energy should be generated on an annual basis. Nevertheless, an over-dimensioning of the system would be unfavorable for the recuperation of the system as this excess energy is not financially compensated. Moreover, if a load increase is expected in the future, ICE does not permit an over dimensioned system. However, at the time this extra demand becomes visible in the electricity bills, an upgrade of the solar system is always possible. To calculate this maximal system size a reliable estimation of the yield is the key value. For the selected location in downtown Alajuela the specific yield is 1 516 kWh/kWp per year. This value is estimated by the pvPlanner and the recommended 5 % safety margin is applied. With the specific yield (Yspec.) and the electricity consumption (Econs.) of the last 12 months of each client, the maximum installable photovoltaic peak power (Ppeak) can be calculated with equation 2. The unit kWp refers to the maximum power in kW that the system produces under Standard Test Conditions (STC).

( )
4.3.1 Household 1: Small Apartment with Low Electricity Consumption
The electricity consumption of the first analyzed household was 1 040 kWh, from September 2012 until August 2013, which equals 87 kWh/month. This low amount of energy consumption refers to a young couple living in a small apartment, in a house consisting of eight families, with neither a washing machine nor a drier nor a television. The consumption of the first six months of the period was 585 kWh, and in the second half of the observed period 455 kWh. This significant change resulted from the replacement of the electrical stove to a gas powered one. With this measure they reduced their consumption from 98 kWh/month to 76 kWh/month. This is a reduction of the electricity consumption of more than 22 %. Notwithstanding, the electricity provider would allow

56

4. Profitability of PV Electricity in Costa Rica them to install a solar system with the peak power based on the average demand of 87 kWh/month, as this is the average of the last 12 months. Calculated with equation 2, and a specific solar electricity production of 1516 kWh/kWp per year, this would equal a system of 680 Wp. However, as this system would produce more electricity than currently needed, the economical optimum is a system designed on the new demand. A system with 600 Wp would be sufficient to produce the entire electricity needed by the couple using the electricity grid as their storage. Due to the small system size, specific installation costs are quite high. As stated in Table 4 the specific price would be around 3.1 USD per Watt peak installed, so the installation price is 1 860 USD. From then on the electricity bills would vanish and only the maintenance costs of the system would stress the budget of the couple. With the electricity price of 17.6 US cents in 2013, they would save 150 USD after subtracting maintenance costs of 10 USD/year. With increasing electricity prices in the coming years, explained in chapter 2.4.4, the break-even point and a positive ROI would be reached after 11.2 years. In order to benefit from the profits of the system, the couple would have to stay in that apartment for at least this period of time. A more realistic alternative in this case would be that the owner of the eight apartments installs a PV system on the roof of the house that is sufficiently big to cover all demands. This would enable him to receive a significantly lower specific installation price than the separated parties. Furthermore, the energy exchanges with the grid would be reduced as the different consumers would level out the overall consumption profile. The recuperation time of 11.2 years seems very long for the small family, yet compared with the warranty of the solar panels between 20 and 30 years - it is not. The internal rate of return (IRR) of the system seen on 20 years would be 9 %, but this value is more important for small companies and industries and will not be evaluated in this case.

4.3.2 Household 2: Row House with Medium Electricity Consumption


A more representative electricity consumption for households in the Central Valley can be seen in the second household. A family of three, living in a two story row house, consumed 3 250 kWh in the time period from August 2012 until July 2013, which is very close to the average annual consumption in the residential sector. This equals an average monthly consumption of 270 kWh with a variation from 204 kWh to 443 kWh per month. This variation indicates that the electricity bill always consists of both tariffs. The first 200 kWh each month are priced with the low tariff of 17.6 US cents per kWh and the other 70 kWh with 31.8 USD cents. The higher consumption compared to the first case has different reasons. The warm water used to shower has to be provided electrically for three instead of only for two people. In addition to the extra electric devices like stove, washing machine, drier and two televisions, more lights are used to illuminate the bigger living space. The maximum installable PV peak capacity given by the Plan Piloto is based on the demand of 3 250 kWh/year. For the location in Alajuela the maximum system size therefore equals 2.1 kWp, which would generate all the electricity of the household. The specific price for a 2.1 kW PV system was determined to be 2.7 USD/Watt peak. Therefore the system would cost approximately 5 700 USD. The amount of 690 USD, which was spent on electricity in these 12 months, can be used to pay back the system and maintain it. With an assumed value of 30 USD for maintenance costs, the actual savings would amount to 660 USD in the first year. The rising electricity prices would increase this value every year. However, due to the degradation of the

57

4. Profitability of PV Electricity in Costa Rica PV modules, small amounts will have to be paid to the electricity provider in future years again. Taking these factors into account, the family would have to wait 8.5 years until the ROI is positive. Another option would be, to install a PV system to cover only the 70 kW per month for which they pay the high electricity price, and still buy the cheaper electricity from the utility. For the 70 kWh per month they would need a system of 600 Watt, which would result in the high specific costs, just as in case 1. However, the electricity price difference is so significant that the break-even point would drop to 6.3 years in this case. But this value is highly sensible to the irradiance conditions as well as to demand changes. Therefore, the fast break even point for this system design cannot be stated with as much certainty as the previous value of 8.5 years, which is valid only for the full selfproduction.

4.3.3 Household 3: Single-family House with High Electricity Consumption


The demand of the third observed household is fairly high compared to the other two cases. It reflects the consumer behavior of upper class Costa Ricans and many foreigners living in the country. In the observed 12 months the total electricity consumption of the four headed family was 10 600 kWh, which equals 890 kWh per month. The single-family house has a big kitchen with a massive double door refrigerator with freezer and a dishwasher. The hot water for tabs and showers is produced with an electric boiler and constantly kept on high temperature. Several in- and outdoor lights and televisions are additional consumers. Notable is also the demand peak of 1 020 kWh in December caused by Christmas decorations. This high consumption enables the family to install a PV system of 7 kWp on their roof and keeping the possibility of being connected to the Plan Piloto of ICE. The specific installation price of the turnkey system would be 2.3 USD/W in that case. As this consume behavior corresponds to the richer society in Costa Rica, the capital for the inversion of 16 100 USD for the PV system is available in some cases. For the high electricity price the family would save 3 000 USD and more each year. Therefore it would reach a positive ROI after 5.9 years, including the degradation of the modules as well as the maintenance costs. For someone who owns his house this timeframe of recuperation is surely acceptable, and will also add value to the property. For the next 15 years, in which the Plan Piloto guaranties the net metering possibility, the electricity for the house could be provided entirely by the solar system, if the consumption is reduced by energy efficiency measures according to the degradation of the PV modules of 1 % per year. The production of the electricity corresponding to the higher tariff does not lead to a significant profitability increase of the system in this case, due to the higher specific installation costs of a smaller system.

4.3.4 Summary of the Observation in the Residential Tariff


The comparison of the three cases reveals that under the Plan Piloto of ICE all systems would reach the profitability long before the expiration of the warranty of the PV modules. All key values of the three different households and the corresponding optimal solar systems are summarized in Table 8. Similar to the electricity prices that vary almost by a factor of two between the first 200 kWh per month and the additional kWhs the time of recuperation varies significantly, from 5.9 years to 11.2 years. The significantly higher electricity prices and the lower specific installation costs make systems for houses with high consumption much more profitable than for lower consumptions. However, if owners of apartment buildings install systems for several parties at once they can also benefit from the lower specific installation costs.

58

4. Profitability of PV Electricity in Costa Rica


Table 8: Summary of the key values of PV systems for the residential sector.

Units Electricity consumption Specific electricity price Size of PV system Specific installation price Price of the PV system Savings on the electricity bill Return of Investment (ROI) kWh/month USD/kWh kWp USD/Wp USD USD/Year Years

Case 1 87 0.18 0.6 3.1 2 000 170 11.2

Case 2 270 0.22 2.1 2.7 5 700 660 8.5

Case 3 890 0.30 7 2.3 16 100 3 000 5.9

All these recuperations can be reached with a simple net metering and without any overpriced incentives, as it was done in Germany. Although this net metering plan still does not exist in the entire country, it is required to be extended in the near future. In the areas of the other electricity providers a more detailed analysis has to be performed to design cost effective PV systems nowadays. As the grid cannot be used as storage and batteries are still too expensive at the moment, at each time step the electricity demand has to be equal or higher than the solar production to not waste the electricity. Therefore, precise measurements with at least 15 min resolution have to be performed in each household, as this is not accessible through the utility. The monthly consumption is recoded by the utilities for the electricity bills. This is obtained manually from the staff of the utility every month. According to some observations of clients, however, sometimes the values are just estimated if nobody covered the area during the month and balance is made in the following month [80]. Indication for this was also found in the electricity bills of the first two cases. To perform the analysis for other distribution grid operators, measurement devices would have to be purchased and installed to collect at least one year of measurement data for a representative result. This has not been done, but the GIZ and the Acesolar are planning to install measurement devices, to be able to analyze the load behavior in more detail in the future. But as most household consumption takes place during the night and in the mornings when the people take showers, cook and watch TV PV systems cannot deliver power at the times of peak demand. To not feed-in excess electricity into the grid at noontime the system would have to be designed very small and would suffer from high specific installation prices and a low degree of electricity autonomy. Only for the single family house the combination of the solar system with the electric boiler and a storage tank for the warm water, as proposed by TUM for Germany, could be a suitable option [81].

59

4. Profitability of PV Electricity in Costa Rica

4.4 Profitability of Self-Consumption for Companies in the General Tariff


4.4.1 Electricity Price in the General Tariff
The General Tariff applies to all businesses and small companies in Costa Rica. It is also divided into two sections but the composition of the electricity bill is slightly different from the Residential Tariff. Businesses with energy consumptions below 3 000 kWh/month, for instance service and sales companies, pay a fixed price of 0.266 USD/kWh, which is similar to the price in Germany at the moment. For consumptions higher than 3 000 kWh per month the energy price for electricity is lower and amounts to 0.16 USD/kWh. However, in addition to the energy, the peak power demand of each month has to be paid as well. This is the power that the energy provider has to have in reserve at all times in case the customer demands it. The energy consumption is measured in 15 minutes intervals and from these measurements the power demand is calculated constantly. The peak power demand is the highest power required during a month in one 15 min interval. For each kW the company is charged 26.36 USD by ICE at the moment. This adds at least another 20 % to the electricity bill if the energy is used in a totally consistent manner, but this is almost never the case. Normal fluctuations can double the bill, due to the charge for the power. Therefore the electricity prices in this part of the General Tariff are the highest in Costa Rica.
Table 9: Shown are the electricity prices of ICEs General Tariff in 2013 in USD per kWh [68].

T-GE General Price in USD/kWh Less than 3 000 kWh/month More than 3 000 kWh/month Energy in kWh USD 0.266 USD 0.16 Powerin kW USD 0 USD 26.36

To see the differences resulting from the two parts of the tariff one exemplary company in each part is selected and analyzed in detail. All calculations are based on an annual balance due to the connection to the Plan Piloto, and the location is assumed to be Alajuela. These are the same assumptions as in the previous analysis. They are put in place to be able to compare the results of the different tariffs. The same formulas and the same specific yields are applied. In addition to the ROI, the IRR is calculated on the basis of 10 years as banks require it to give a loan and on 20 years as this is the minimum warranty of solar modules.

4.4.2 Company 1: Service Agency with an Electricity Consumption below 3 000 kWh/month
The first case is a small service agency with an office for 20 employees. The main office hours are from 7 am to 6 pm, and only few people come earlier or leave later than that. Furthermore, a small cafeteria with a coffee machine and a microwave for the employees is provided. In the observed 12 months, the monthly consumption varied between 1 850 and 2 100 kWh. The total consumption of 23 500 kWh in this year, resulted to be 1 950 kWh per month on average. As the company consumes less than 3 000 kWh, the peak power demand is not charged nor measured. Therefore, the

60

4. Profitability of PV Electricity in Costa Rica daily profile of the company could not be analyzed to evaluate the time correlation of demand and solar production. But from the office hours and the intensive use of the cafeteria at lunchtime a higher correlation than in the residential sector can be assumed. In order to accurately design a PV system without the use of the Plan Piloto, however, the demand curve has to be measured. Using the annual balance and equation 2 the maximum system size for the Plan Piloto would be 15.4 kWp. From quotes provided by solar installers in Costa Rica for such a system, the average price was determined to be 35 500 USD. This results in a specific installation price of 2.3 USD/W. The produced electricity of 23 500 kWh/year would reduce the electricity bill by of the company by 6 200 USD in the first year. After subtracting approximately 100 USD for the operation and the maintenance of the system the savings per year amount to at least 6 100 USD. This gives a payback time of the inversion of 6.3 years. As the specific installation price is the same as in case 3 of the Residential Tariff and the electricity prices are just slightly lower, the time for a positive ROI is almost the same. The IRR calculated on 20 years would be as high as 20 %. If the company has the money for the project available, they can use this value to compare the investment with other projects to see what gives them the highest in IRR for the lifetime of the system. For a bank loan this calculation has to be based on 10 years. Also in this case the IRR is as high as 15 %. This is far above the capital cost, which is assumed to be 6.25 % at the moment. Therefore, with the required securities the application for a loan at the bank should have good chances for success.

4.4.3 Company 2: Fabricating Company with an Electricity Consumption Greater than 3 000 kWh/month
The second company fabricates and coats wheels and rolls with different materials. The approximately 20 employees work in one shift. The annual energy consumption in 2012 from the manufacturing hall was almost 63 000 kWh. On average this was 5 250 kWh per month with a high variation of 1 500 kWh. Favorable for the balance with the Plan Piloto was that the lowest consumptions were in December and January. If this was a onetime occasion or if that is always the case could unfortunately not be identified. As this consumption is superior to 3 000 kWh/month, the company has to pay the peak power demand in addition to the 850 USD for its energy every month. In 2012 this power varied from 33 to 47 kW. The payments for this power varied therefore between 900 and 1 200 USD per month. The average power demand of 37.5 kW and its price of 1 000 USD is used for the calculations. Summing the costs of energy and power and dividing it by the consumed electricity results in the specific electricity price of 35 US cents per kWh. A peak power reduction by the PV system cannot be assured, because the peak can be at times when the solar system is not producing a significant amount of electricity. In the early morning or during heavy rain and cloud coverage, the PV system might not be able to supply sufficient electricity to lower the peak power required from the grid notably. Consequently, only the reduction of the energy consumption can be considered for the savings in this part of the General Tariff. However, the energy consumption of the manufacturing hall can be dropped significantly if a sufficiently big solar system is installed. This lower energy consumption from the utility would enable the company after a qualifying period of six months to pass over to the other part of the General Tariff in which only the energy is charged and the peak power is not considered. If the electricity consumption in all six months is below 3000 kWh/month, ICE changes the applied tariff and the electricity meter, and then

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4. Profitability of PV Electricity in Costa Rica the peak power is not measured any further. The energy price in this tariff is higher, but comparing the effective specific electricity price of more than 35 US cents/kWh at the moment, with the new price of almost 27 US cents/kWh, the advantage becomes visible. By installing the maximum permitted system size of the Plan Piloto, the whole electricity bill would be equal to cero and the price of the 26.6 US cents/kWh would only be applied if a system failure is present. To produce the electricity consumed by the company in 2012, a PV system with 41.5 kWp has to be installed in Alajuela. The specific installation price of 2.2 USD/Wp results from an initial investment of approximately 91 300 USD for the PV system. For the high effective specific electricity price in this tariff the savings per year would be 21 800 USD, having already subtracted the operation and maintenance costs. These high savings result in a rapid investment payback of less than 5 years. With a calculated financial lifetime of 20 years, the IRR of this investment is higher than 27 %. This indicates that the investment is extremely profitable as only few projects lead to comparable return rates. The IRR calculated on 10 years, which is required for the bank, is also higher than 25 %. However, banks fear the risk that these high savings would vanish if the tariff change is not applied by ICE, or an expansion of the company would disable the transition to the other tariff. Therefore ARECA has already made clear that, they would only support a project based on the tariff change if being sure that the client knows about the risks and surely takes them into consideration when changes are applied to the existing factory.

Figure 4.3: Depicted in blue is the ROI of the PV system depending on the installed system size in years and in red the IRR for the system.

As ICE would change back the meter and the tariff if the consumption rises above the 3 000 kWh/month threshold, this has to be avoided under all circumstances. Therefore the safest system is one, that is sufficiently big to cover the entire electricity demand of the company and is not designed just to drop the consumption below the border of 3 000 kWh/month. If the system is designed to have an average rest energy consumption of 2 000 kWh/month, the tariff change would in theory be feasible. However, the real demand fluctuations, of up to 1 500 kWh in this case, would cause in some months demands of 3 500 kWh, and this would disable the tariff change and reduce

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4. Profitability of PV Electricity in Costa Rica the expectable savings significantly. This dramatic change can be seen in Figure 4.3 by observing the ROI and the IRR curves over the PV system size. With a system of 28.5 kWp this critical point is reached and the ROI changes rapidly from less than 4.5 years to approximately 9 years, as the savings from the peak power reduction disappear. The IRR shows a mirrored behavior along the x-axis. The small steps at the beginning of the curves are caused by the used step function for the specific system prices introduced in chapter 4.2.1. Smaller systems lead to higher installation costs and therefore to less return per capital. The safest option, but also least profitable, is not to consider the tariff change, and only taking savings on energy into account. In 9 years the system would then be paid back. However, by installing the above mentioned 41.5 kWp system and taking little consideration of PV system in the expansion plans of the company in the coming years, the positive ROI is reached after less than 5 years. A small reduction of the installed capacity reduces the break-even point further to just 4.5 years and also increases the IRR to more than 35 % in 20 years and almost 30 % for 10 years. But this is connected to higher risks as small demand increases or fluctuations lead to the loss of the savings on the power, as feared by lenders. If the company invests in an expansion of the plant instead of in energy efficiency measures the demand could increase above the threshold as well. The benefits of the PV system would then vanish and the bankability would no longer be given as calculated before. Therefore this design is not recommended.

4.4.4 Summary of the Observation in the General Tariff


Both parts of the General Tariff are very profitable because the companies in both tariffs pay comparably high electricity prices. At the same time, the higher demands of companies compared to households enable them to install bigger systems under the Plan Piloto as indicated in Table 10. This results in lower specific installation prices of only 2.3 and 2.2 USD/Wp. In the first case, in which the consumption is below 3 000 kWh/month, the system has a positive ROI after 6.3 years without any concerns about the system design. For the second case, on the other hand, the handling of the tariff change is of prime importance. By not considering the change of the tariff and only reducing the energy, the system is paid back in 8 years unless the installed system is very small and suffers from specific installation prices similar to the one in the Residential Tariff. A positive ROI of less than 5 years with very low risk can be reached with a proper design to the maximum installable capacity given from the Plan Piloto for companies having a monthly demand just above 3 000 kWh/month. Further improvement of the economic values is only possible in the connection to higher risks and might end up in a break-even point of 8 years and 13 % of IRR with tiny variations to the calculation. Companies in the General Tariff that have an even higher consumption than case 2 are even more susceptible to this risk. An exemplary company with 60 employees, that repairs cars, has variations of more than 4 000 kWh from their monthly average of 22 500 kWh. So a design to this average would not guarantee that the demand stays below 3 000 kWh in each monthly sum. Moreover, even if this is guaranteed, ICE does not ensure the change of the tariff for clients with very high power consumptions at the moment. As they do not want to lose the money from the 135 kW peak power demand, they will probably not change this in the future. This is reasonable as the PV system would not lower the maximum power requested from the grid and the utility has to maintain its capability to supply it at any instant of time. A borderline, that defines which energy or power demands qualify

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4. Profitability of PV Electricity in Costa Rica for a change of the tariff and which do not, is still not published by ICE, despite having been requested. The demand structure of the analyzed company in case 2 qualifies almost certainly (with a probability of 99 %) for the tariff change as stated by ICE [82]. However, the ROI of any system for a company with higher demands should be calculated based on the conservative assumption of only reducing the energy costs but not eliminating the peak power expenses. Hence, all these projects would have a break-even point after approximately 8 years.
Table 10: Summary of the key values of PV systems for companies in ICEs General Tariff.

Units Electricity consumption Peak power demand Specific electricity price Size PV system Specific installation price Price of the PV system Savings on the electricity bill Return of Investment (ROI) kWh/month kW/month USD/kWh kWp USD/Wp USD USD/year Years

Case 1 1 950 -0.27 15.4 2.3 35 500 6 100 6.3

Case 2 5 250 37.6 0.35 41.5 2.2 91 300 21 300 5

Case 3 22 500 135 0.32 180 2.0 360 000 42 600 8

As the companies normally have high demands during the daytime, when the solar system produces its electricity, the temporal correlation between the generation and the demand is significantly higher than in the residential case, and less electricity is injected to the grid. This makes solar electricity also more attractive outside the area of ICE distribution. A precise demand analysis has to be performed to see the lowest demands during the whole year so the maximum system size can be calculated. Companies, which are charged the peak power, can request this data from the electricity grid operator as this information is collected there to calculate the peak power demand. The profitability surely will be smaller as the systems would have to be designed smaller, and this would lead to higher specific installation prices. The change of tariff cannot be considered in this case, because the degree of autonomy with a PV system that is just designed to the lowest load of the year is not very high, and a significant rest demand will always be present. Furthermore, in times when the company is closed, on Easter and Christmas for example, as well as on weekends the produced electricity cannot be used. An injection to the grid is normally possible without receiving any credit for it. Here it is also important to inform the grid operator about the possible injections so an appropriate electricity meter is installed. Most meters installed at the moment just count every kWh passing them in either direction and therefore clients had higher electricity bills than before the installation of the solar system in some cases. This brought bad reputation to the technology.

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4. Profitability of PV Electricity in Costa Rica

4.5 Profitability of Self-Consumption for Industries in the Medium Voltage Tariff


The third tariff is the Medium Voltage Tariff, which applies to industries connected directly to the medium voltage grid. Only companies with a consumption of at least 120 000 kWh per year can apply for the connection to these grids with 1 kV to 24.5 kV to reduce cable losses [83]. This tariff is very distinct from the other two. The utilities charge the energy consumption and the required peak power of the month as in the General Tariff, but depending on the time it was used. As shown in Table 11, during the night from 8 pm to 6 am the price for consumed electrical energy is very low and so is the price for the maximum power demand. The price for the energy in the off-peak period, from 6:00 until 10:00 in the morning and from 12:30 until 5:30 in the afternoon, is slightly higher but still inexpensive at 6 US cents per kWh. The peak periods are lunchtime from 10:00 am until 12:30 pm and in the evening from 5:30 until 8:00. At these times the prices for energy and power are significantly higher and similar to the General Tariff. For the very low prices during the other two price periods, companies usually switch to the Medium Voltage Tariff as soon as they reach the required energy demand of 120 000 kWh in one calendar year, although they have to pay to peak power for each timeframe. The higher expenses of the three charges of the power demand are usually easily covered by the savings in the energy price.
Table 11: Summary of ICEs electricity prices in the Medium Voltage Tariff and their time of appliance.

T-MT Media Tension Prices Night Off-Peak Period Peak Period Energy (kWh) USD 0.034 USD 0.058 USD 0.154 Power (kW) USD 11.10 USD 17.33 USD 24.82 Time 00:00 - 6:00 20:00 - 24:00 6:00 - 10:00 12:30 - 17:30 10:00 - 12:30 17:30 - 20:00

As explained in the analysis of the General Tariff, the reduction of the peak power demand cannot be guaranteed as clouds can reduce the output power of PV systems significantly. The case that the system performs only with 5 to 10 % of its power at the time of the maximum consumption in the off-peak time can always happen. The same applies also for the peak time period at lunchtime. Maximum power demands in the evening hours of the peak period cannot be reduced by PV systems as it is already almost dark. For this reason, savings in the expenses for power are not considered. If in one month the PV system performs well at the time of the highest consumptions, the extra savings will benefit an even faster recuperation of the inversion and improve the reputation of the PV technology. In times when the night tariff is applied, no electricity will be produced by the PV system and therefore no savings can be expected. However, for the low price at night it would financially not be attractive to produce the electricity with solar. In the Plan Piloto the electricity is not compensated with money but balanced on an energy basis. Ideally all electricity produced in the peak period, is also used in the peak period. But the PV systems under the Plan Piloto can be sufficiently big, to cover the whole demand of the company at day- and

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4. Profitability of PV Electricity in Costa Rica nighttime. The surplus electricity produced during daytime would have to be used during the night. In the Plan Piloto of ICE the balance of energy is not one to one if production and consumption are in different price periods, but are based on the price relation between the tariffs. In the peak period the electricity is worth 4.5 times more than at night time. Therefore, for every kWh of solar electricity produced during the peak period 4.5 kWh can be used at night. The same applies for passing energy between the peak and off-peak periods with a factor of 2.66 [39]. However, no PV system in the Medium Voltage Tariff is installed yet and therefore this balancing mechanism has not been applied until now. Normally, systems for companies in the Medium Voltage Tariff are not designed to cover the whole demand of the plant because of the big spatial dimensions that such a plant would require. Therefore only in special cases this balance has to be applied, but this is not considered here. For the huge price difference between solar electricity produced during the peak period and in the off-peak period, the solar yield has to be analyzed for the time of production during each day. Some installers made the simple hourly balance of 2.5 hours of peak period to 9 hours in the off-peak period during the day to sell PV systems to industries. However, as the solar potential is not constant throughout the day this is not representative of the actual production shares. Figure 4.4 shows the solar power distribution averaged over one year in Alajuela. As it was stated before, the solar power is always zero before 6 am and also after 6 pm and therefore the production of solar panels is zero as well. The yellow areas represent the periods of the off-peak period and the red ones the peak periods. From an analytical comparison of these integrals the ratio of the production in the two periods can be obtained. In Alajuela 36.6 % of the solar energy is received by the solar panels during the peak period and the remaining 63.4 % are received in the off-peak period. This ratio varies slightly throughout the year from 34.2 % in the peak period in August to 39.8 % February. Very similar ratios were found for several different locations in Costa Rica. These ratios at different locations can be observed in Appendix 6 and used to design PV systems for industries.

Figure 4.4: Average daily solar power in Alajuela divided in the three medium voltage price periods.

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4. Profitability of PV Electricity in Costa Rica

4.5.1 Exemplary Calculation of a Company Connected to the Medium Voltage Grid


As all companies that are connected to the medium voltage grid have the same electricity prices, the analysis of one company is representative for the whole sector. Differences in the load factor, which represents the ration between power and energy consumption, have no influence on the profitability, as power reductions are neglected as explained above. Therefore the monthly load profile of the exemplary company was obtained. The calculations are again based on the Plan Piloto and therefore the investigation of the hourly load fluctuations is not necessary. The elected company is one of the biggest sea food distributer in Costa Rica and very interested in the option to install solar panels on their vast roof area. Although the company reduced its yearly electricity demand by almost 20 % since 2011 with energy efficiency measures, it still has an exceptional high demand. In the 12 months from July 2012 until June 2013 the company had a total electricity consumption of more than 10.2 GWh, as indicated in Table 12. Of this total energy, 2.2 GWh were required during the peak period. In the other two periods approximately 4 GWh were used in each. In the observed time frame, the maximum power demands in the off-peak period were on average 1 900 kW. The highest consumptions during the peak period was 1 760 kW and during the night it was 1 620 kW. The company spent in the 12 months approximately 1 850 000 USD on electricity. The only two reduction potentials of solar systems without auxiliary devices are the peak and off-peak energy consumption. Hence, a system should be designed, so that at least the energy costs of 570 000 USD in these two periods can be reduced and the money invested in other projects.
Table 12: Electricity demand of the exemplary company during one year and the associated price.

Electricity consumption Period Peak Off-Peak Night Total Energy 2.2 GWh 4 GWh 4 GWh 10.2 GWh Average Maximum Power 1 760 kW 1 900 kW 1 620 kW --

Price of Electricity For Energy USD 340 000 USD 234 000 USD 135 000 USD 709 000 For Power USD 526 000 USD 396 000 USD 216 000 USD 1 138 000

The design of the system is not based on the elimination of the entire electricity bill as in the other cases, because the electricity price at night is very low and this would require a system of more than 5 MW. Furthermore, there is no certainty that the balance ratio related to the price will be implemented exactly as published at the moment. Therefore it should not be used at the moment. Hence, the desired system should not produce excess electricity in neither of the two periods on an annual basis. The ratio of the solar production in the peak period to the off peak period is 1:1.7. Observing the energy demands one sees that the ratio in the consumption is 1:1.8 and therewith higher. Consequently, producing sufficient energy to cover the entire consumption of the off-peak period would result in an overproduction in the peak period in this case. This is not desired, so the system design is based on the peak production.

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4. Profitability of PV Electricity in Costa Rica During the peak period 36.6 % of the total specific electricity production of 1 516 kWh/kWp per year is obtained. This amounts to 556 kWh/kWp per year. The desired production of 2.2 GWh is divided by the specific yield in this period to obtain the required system size of 3.96 MW. This is indicated in Table 13, which summarizes the key values of this system. It would also produce 3.8 GWh during the off-peak period so that only 200 kWh/year remain in this period in coming years. As this system has a price of 7.1 million USD a low specific installation price of 1.8 USD/W is realistic. The savings of the system equal almost the entire costs of the energy in the peak and off-peak period. Reduced by the security, administration, operation and maintenance costs that such a large system would have, a net saving of 533 000 USD could be obtained in the first year. Assuming the conservative increase of the electricity prices of 5 % per year, these savings would increase dramatically in the future years. However, for the low energy prices present in the Medium Voltage Tariff it takes as long as 12 years to obtain a positive ROI. This is just the limit for getting a loan from a bank in Costa Rica. The IRR on 20 years results to be 7.74 %. These values may not seem very attractive in comparison with the core business of the company. This investment, however, is not comparable with a new production line or other core-business related investments. The company would invest with this system in their sustainable future. With a solar system they become an electricity generation company as a side business and would ensure themselves predictable electricity prices for the next 20 or 25 years and afterwards still a considerable amount of energy for almost no costs. Furthermore, their carbon footprint would reduce significantly and the image of the company would improve. This can be very important especially for internationally operating companies. The proposed system for this exemplary company would be one of the biggest in Central America and would surely attract the regional media, resulting in further advertisement.
Table 13: Summary of the key values of a PV system for the exemplary company in the Medium Voltage Tariff.

Units Electricity consumption Electricty price Size of PV system Specific installation price Price of the PV system Savings on the electricity bill Return of Investment (ROI) kWh/month USD/kWh kWp USD/Wp USD USD/years Years

Peak period 185 000 0.154 3 960 1.8

Off-Peak period 335 000 0.058

7 130 000 533 000 12

Another reason brought up by the person in charge of the solar system for that company was that they not only fear the significantly rising electricity prices in Costa Rica but also that power outages will be more frequent in the future [84]. Therefore the company has already installed a Diesel generator with 2 GW of thermal power to be able to keep its production capability when the utility fails to provide sufficient electricity. However, burning Diesel is significantly more expensive than using the electricity from the grid, and therefore this generator is only operated in emergency situations. In comparison with solar electricity the price difference would be even bigger. For this

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4. Profitability of PV Electricity in Costa Rica specific constellation, a hybrid system between the generator and a solar system is considered by the company. With an intelligent control unit, this could possibly also reduce the power demands in the peak period. If the solar system suffers from cloud coverage, the generator could fill up the gap to cover the demand. In times of high solar irradiation, Diesel could be saved and a higher profitability be gained. To precisely control this, the startup time, load fluctuations as well as solar production patterns and prices have to be analyzed in detail. But as this option is not representative for the entire sector, this was not carried out in this study. Also outside of the Plan Piloto the option of solar installation is suitable, for the very high demands. These enable PV system designs to the minimum demand during daytime without a mayor increase of the specific installation price. The same losses as in the General Tariff have to be considered for the electricity produced at times when the company is closed as the energy cannot be stored in the grid. However, companies with steady demand from cooling facilities or other automatic machines could also use the production on the weekend or holidays. Depending on the system design, in some cases the payback time of 12 years can also be reached outside of the Plan Piloto. Some companies are also trying to convince their utility to introduce also a net metering option for their clients or at least to make an exception for them. All the calculations made can give an idea about the system size and profitability, but do not replace the detailed system layout of a PV installation company. Each real system design has to be adjusted not only to the demand of the company of a single year. Demand reductions and increases can have significant influences to the profitability of the systems. In this study the location chosen is Alajuela, but for residents and companies located in Guanacaste the systems can be designed smaller and would therefore be even more profitable.

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5 Influence of PV on the Electricity Mix


In the previous chapter the profitability of solar systems for self-consumption of consumers was analyzed and assured. At the moment only a small amount of less than 2 MW photovoltaic capacity is installed in Costa Rica. However, if people and industries in the country realize that they can produce their electricity much cheaper than provided by the utility, possibly the installed capacity will rise significantly in the upcoming years. As electricity prices rise constantly and PV system prices are still falling slightly, the profitability of the investment in solar systems rises continuously, and so should do the installed capacity for self-consumption in the next years. Private electricity producers have already realized this upcoming potential and the ACOPE is making a great effort to gain more knowledge about the technology and find the most profitable locations for solar systems. In addition, also the utilities themselves can take advantage of the great irradiance conditions and low PV electricity prices by installing own systems. ICE has gained some experience on operating and maintaining a 1 MW PV power plant. It has collected a significant amount of data to see the performance of the system as well as its fluctuations during 2013. Now they should go a step further and install more systems to lower the price of electricity for Costa Ricans again. With power plants of 1 to 10 MW capacity they could produce electricity considerably cheaper than with fossil fuels. The energy plan of Costa Rica set the target to become the first carbon neutral country by 2021 and by this same time the electricity generation should be completely from renewable sources again. As the electricity demand is rising dramatically at the moment this target will not be easy to fulfill. Almost a doubling of the installed capacity has to be executed. One source, to eliminate the electricity derived from fossil fuels, is the solar energy. It is already cheaper than the electricity prices of the consumers and comparable with the generation prices of the conventional electricity mix in Costa Rica. The influence of a large increase of solar capacity throughout the country is investigated in the following. Therefore the actual electricity generation per month is demonstrated and then the changes are analyzed, that solar electricity would make to these monthly distributions. The same is applied subsequently to the average daily distribution.

5.1 Electricity Mix of Costa Rica at the Moment


The graph of Figure 5.1 shows the composition of the produced electricity each month during the year 2012. Every energy source is depicted in a different color to see the usage of each plant type. In green depicted are the six geothermal power plants of the country. Altogether, these have a maximum power of 195 MW and operate at full load almost throughout the whole year. They are just stopped for approximately two weeks for scheduled maintenance per year. Above this, the highly fluctuating six wind farms can be observed in purple. Higher wind speeds during the dry season lead to a higher utilization ratio of the 129 MW installed power, than in rainy months. In grey depicted are small power plants, which are mainly operated by private electricity generation companies using water, wind or biomass. For the contracts with the private generators, the electricity from these renewable sources has the permission to be always injected to the grid and cannot be regulated by ICE.

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5. Influence of PV on the Electricity Mix Run of River power plants, which are displayed in dark blue, represent the main technology used in Costa Rica. But they are also the ones with the highest seasonal fluctuations. These 31 power plants have a total installed capacity of approximately 1 220 MW. Except of the three power plants Cachi (100 MW), Pirris (140 MW) and Angostura (180 MW), which have basin for storing water for about one week, all plants have to convert the mechanical energy of the water to electricity when it is available. Production shifting is only possible for several hours, but not for days and longer periods. The only renewable power plants that can serve for a seasonal storage are the hydroelectric storage power plants connected to Lake Arenal, which are shown in light blue. In the power plant Arenal, the water falls 210 m in three decades and produces up to 160 MW with its three Francis turbines. Located below this power plant, are two more hydroelectric power stations. These use the water again and can produce an additional power of 206 MW [85]. This group of power plants with storage was constructed in 1974, to balance fluctuations of the run of river power plants. For this reason this power plant is the most important one, for the stability and robustness of the electrical system of the country. Resulting from the increasing demand, these power plants could not fully balance the fluctuations any longer in recent years. In 2012 these power plants were overused and the water level of January 2012 was not reached again in January 2013 as indicated in Appendix 7. To maintain its balancing function, the energy taken from Lake Arenal has to be reduced. Therefore more and more fossil fuel power plants were installed, to compensate the deficit in the past. This power source is under the monopoly of ICE; others are not allowed to install thermal power plants. At the moment, ICE has 33 thermal power plants installed, with a total effective capacity of 533 MW. As these power plants do not operate with steam cycles, as it is the case in Germany, the efficiencies are not as high but the turn-on times, of just 4-6 hours, are significantly shorter. The obtained energy each month is shown in red in Figure 5.1. The total generated electricity of the fossil fuel power plants was 833 GWh in 2012.

Figure 5.1: Displayed is the actual situation of the electricity generation in 2012 per month divided in the type of power plant used to cover the demand of Costa Rica [86].

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5. Influence of PV on the Electricity Mix

5.2 Electricity Mix of Costa Rica without Thermal Power Plants


To produce the same electric energy that the thermal power plants supplied in 2012 with PV, a capacity of 600 MW would have to be installed. Ideally this 600 MW would be installed well distributed over the country so the local climatic influences are leveled out. With this distribution the PV systems have an average specific yield of 1 390 kWh/kWp per year. It cannot be assumed that all panels receive the irradiation of Guanacaste with a specific yield of more than 1 520 kWh/kWp as this would make the system unstable. Furthermore, closer distances to the clients resulted by a distributed power generation increase the overall system efficiency. This quantity of solar would substitute the 833 GWh, which were produced in 2012 by the installed thermal power plants with 533 MW of capacity. Of course the solar energy cannot be turned on and off as it is possible by using fossil fuels, in which the energy is already stored, so it has to be verified if the balancing task of the fossil fuels can be fulfilled though other energy production methods.

Figure 5.2: Demonstrated is the electricity generation per month divided by the type of power plant used. The left column represents the real situation in 2012 and the right column with an assumed PV installation of 600 MW.

As seen in the chapter 3.3.3 the monthly fluctuations of the produced solar electricity are considerably close to the countrys average. In the dry season from December until March, and also in November, when still plenty water comes down the hills, the power production of solar is usually higher than the required power from the fossil fuels as visible in Figure 5.2 [86]. In these months all energy required can be delivered. Additionally some of the water, usually used from Lake Arenal in these months, can be saved for the first months of the dry season, when the wind power production is lower and the water from the rain has still not reached the turbines of all power plants. From April to October almost every month the some water from Lake Arenal has to be used in addition to the solar production. But this water has been saved before and therefore just the curve of the depletion of Lake Arenal would shift slightly throughout the year, if a solar capacity of 600 MW is connected to the grid. People, who fear that an eruption of one of the volcanos would lower the solar production significantly, can be calmed down with the fact, that the thermal power plans are still connected to the grid and can be easily turned on in an emergency case like this.

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5. Influence of PV on the Electricity Mix Certainly, in Costa Rica this quantity of 600 MW solar cannot be installed within four months, as it has been done in Bavaria on average in the last four years. However, the target of Costa Rica is to become carbon neutral by the year 2021, so there are still seven years of time to substitute the fossil fuels from the electricity generation mix. As the consumption is approximated to rise significantly until then, 600 MW would probably not be sufficient to cover the new demand. Yet, with an average installed capacity of 150 MW per year, Costa Rica would have more than 1 GW solar installed by 2021. This would generate sufficient electrical energy to cover 10 % of the estimated electricity demand in 2021 with solar power, instead of using fossil fuels. Also the phenomena of El Nio and La Nia 5 would no longer be an issue for the countrys electricity production. The lower precipitation during a year of La Nia results in a higher solar output as well as more energy from the wind power plants, which could cover some of the losses of the hydro power plants. Less sun, in times of El Nio, does not bring the countrys electricity supply in danger neither, as the production of the hydro power plants would easily cover the losses in the PV production.

5.3 Influence of Solar Power on the Daily Load Curve


The monthly solar production fluctuation is not as strong in Costa Rica as it is in Germany and therefore is much easier to integrate it in the system. However, the daily fluctuations are almost the same all around the world. At noontime the solar production is the highest and during nighttime no energy can be harvested from the panels. Clouds can temporarily deform the Gaussian solar irradiation curve, which is present on clear sky days. To observe the influence of this fluctuation, the daily generation curves of the energy sources have to be investigated. Possibilities for storing the electricity produced during the daytime to the evening and night hours have to be identified. The average supplied power of the different energy sources in 2012 is depicted in Figure 5.3. The 15 min measurement values from the National Center for the Control of Energy (CENCE) are averaged throughout the whole year for each plant type to see the average utilization throughout the day. As the geothermal power plants are only stopped for maintenance for entire days the average power stays constant for the whole day. The same comportment can be seen in the wind power plants. They are not controllable and produce at random times throughout the day. So the curve levels out, as, on average, there are no times during the day at that the wind is stronger than in others. The high share of hydroelectric power and the biomass power plants make the category Others slightly more flexible. Private generators try to sell as much energy in the peak hours as possible to obtain more money for the electricity. Also ICE operates its run of river power plants at a higher power when the peaks have to be covered, at lunch time and in the evening hours. The power plants connected to Lake Arenal are operated on a more constant level. Similar to the thermal power plants, however, the storage hydropower plants are needed the most in the peak hours. As the thermal power plants should not be turned on and off frequently, they are also operated at night at a considerable level.

El Nio and La Nia are extraordinary, infrequent ocean currents in the Pacific which cause higher precipitation when La Nia is present and less precipitation in years of El Nio [94].

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5. Influence of PV on the Electricity Mix

Figure 5.3: Shown is the annual average of the daily demand curve. The power of each plant type is indicated in a different color [85].

The solar production peaks at lunchtime when the consumption is the highest. Lots of storable resources are required at this time to cover the demand nowadays. The yellow area in Figure 5.4 shows how 600 MW would change the load curves of the other technologies. On average the power from the fossil fuel plants would not be needed from 7:30 am until 4:00 pm. In this time also Lake Arenal could be depleted less, by operating the plants on a lower level and completely disconnecting them from 11:00 am until 12:30 pm. This is exactly the time when the electricity price for the Medium Voltage Tariff is the highest. To cover the demand also at the nighttime, the water saved from Lake Arenal during the daytime can be used. The second peak in the evening can be covered, and also the entire energy required from fossil fuels substituted at night. It is not sufficient, that power plants have only the energy to produce the electricity available, but also the power has to be sufficient. The three hydroelectric power plants connected to Lake Arenal have just sufficient capacity to provide the necessary 370 MW during the evening peak on the averaged day. However, not every day is like the average one and higher power requirements will occur frequently. This would require also a shifted use of the run of river power plants. Most of them can adjust the usage of water by a few hours and contribute to a balanced system. For sure the biggest assistances would be provided by the three plants Cachi, Pirris and Angostura with their weekly storage capacities and a total power of 420 MW. This should cover all daily fluctuations easily. Further fluctuation from extra demands in the next years will be supported by the planed hydroelectric power plant Reventazn, which has a capacity of 300 MW and a basin to store water for at least one week. This project is supposed to be finished by January 2016. Water power plants are the optimal storage as they can be switched on and off within very little time. Thermal power plants need to heat up slowly in 4 to 6 hours to avoid thermal stresses, but hydroelectric power stations can have only 3 to 5 min between the startup and the full power capacity.

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5. Influence of PV on the Electricity Mix

Figure 5.4: Average daily demand curve of 2012 with the power produced by solar energy in yellow.

Considering the startup times and the available capacities on the average day, is only the first step to calculate the influence of solar to the load curve. For a more profound analysis, the distribution of each day has to be analyzed, ideally for more than just one year. Afterwards, a model of the power plant portfolio of the country has to be created with all boundary conditions of the plants, including capacities, storage capabilities, start-up times and power plant locations. A meteorological model of rain, sun radiation and wind conditions would also be helpful. To optimize the system not only for the renewability, but also from a financial point of view, all system operation and fuel costs have to be included additionally. All these tasks were not carried out during this study but provide a large area for further investigation. Also grid limitations and frequency problems due to high solar penetration are not taken into account in this study. However, the assumed distributed generation would rather support the grid than weaken it.

5.4 Influence of PV Electricity on Future Electricity Generation Costs


The best option for electricity consumers is to become independent from their electricity provider by producing electricity with a PV system. But not every customer has the money, the space or the desire to be its own electricity provider. Therefore the influence on the electricity price from the utilities for the remaining customers is analyzed. As explained in chapter 4.2.4, the prices of solar electricity are significantly lower than the generation prices that ICE expects for future projects. Certainly, for storage reasons, solar power cannot be used to power the entire country, but if the desired share of 10 % is reached, to eliminate the fossil fuels, a notable price reduction is possible. The planned hydro power plants Reventazn and Diqus are important to make use of the cheap solar power although they have higher specific generation costs than big PV systems. But some of the 14 potential thermal power plants, which are considered in the expansion plan of ICE, might not be necessary if more solar electricity is used.

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5. Influence of PV on the Electricity Mix For the higher irradiance and its more homogeneous distribution in Costa Rica compared to Germany the decentralized power production can be realized throughout the whole country. By an electricity generation closer to the consumer also the grid utilization and losses and can be reduced. Therefore the overall efficiency of the distribution of electricity can be increased and the utilities can reduce costs for grid extensions. The regulation organization ARESEP would have to analyze these influences to make sure these cost reductions are forwarded to the end costumer. Especially on the Medium Voltage Tariff the influence should be notable because the solar systems would produce lots of cheap electricity at the noon time, when currently the highest prices for electricity are paid. The peak period at noon time could be transformed into off-peak period, if the electricity providers forward the generation cost reduction to the customers. On the other hand the price in the second peak period would probably not be reduced if not even increased. At this time the solar systems have already turned off and the saved water has to be used to cover the demand.

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5. Influence of PV on the Electricity Mix

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6 Resume and Recommendations


The PV technology is beneficial for all segments of Costa Rica but each of them can use other advantages of the technology. This chapter will give some ideas to each subsector how photovoltaic can be used most profitable and what they should do to lead Costa Rica to a sustainable future based on a renewable electricity generation, with solar being a part of the electricity mix. Companies and residents of Costa Rica As shown in this study, in all electricity tariffs it is profitable to use solar electricity for selfconsumption with connection to the Plan Piloto. Depending on the electricity cost of residential systems, they are profitable in 8 to 11 years and commercial systems sometimes even faster with very conservative assumptions. The most important reason why this lucrative option of the Plan Piloto is so far only used by 100 people is the lack of knowledge and the short term mindset of most Latin Americans. In the last years a quite bad reputation was build up for the solar technology as many batteries failed due to inappropriate use by the customers. But at the moment this weak point of the system is not needed for the option of the Plan Piloto. Also the high PV system prices of the last decade and the frequently published costs of 9 USD/W of the Japanese donation in 2012 did not support the fact of cheap solar electricity. Furthermore, there are several installers who try to sell PV systems without knowing all details of the Plan Piloto and other regulations in the country. This leads to wrong system designs and makes the system less profitable than expected or even causes the business to operate at a loss. Therefore it is advisable to ask for reference installations of the company in Costa Rica and maybe even the contact information of former customers. Further assistance can also be obtained from the Costa Rican solar association, Acesolar. Also the Latin American culture, which is more spontaneous than the German, retards solar projects, as most people do not plan for the next 10 years. As systems of bigger size have significantly lower specific installation prices and a lower the payback times, the association with other people living in the same building for a common solar system could be an option. This also reduces the injections to the grid as the different load profiles level out each other [81], the in Germany discussed smart homes are still far away in Costa Rica. Additionally, Costa Ricans value the money they would have to spend initially much more, and therefore tend more towards leasing options. Having seen a few of these contracts can be said that these are not a very profitable option for homeowners and neither for companies. Several hidden costs and risks were identified that would reduce the reputation of solar further. Large companies have also the option to install a system that does not cover the whole demand first, and then extent the system after they gained some experience about the technology and the installer, without a large increase of the specific installation price. For the 4 GW system needed for the exemplary company in the Medium Voltage Tariff a recommendable plan would be to start with 500 kWp and then a year later add 1 GW. Two years later the missing 2.5 GW can be designed with respect of the knowledge and data gained from the other two projects with much lower risk.

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6. Resume and Recommendations Another idea from a Costa Rican installer for companies within the Medium Voltage Tariff is to install a solar system with batteries to be able to disconnect every day entirely from the grid in the peak period. This would eliminate the charge for the peak power in the peak period, as no electricity is taken from the grid in this period. This self-generation has to work every day in a month to save the high amount for the maximum power coverage in the peak period even if there is a week of rain. A battery dimensioned for that case would be very expensive. A better option is to use the cheap electricity during the night to charge the battery, if the battery was not charged by solar the day before. The high price differences between the night and the peak period could make the system profitable depending on the battery price. So far none of these systems is installed so the actual functionality and profitability cannot be evaluated at this point. But for companies that want to assure their production capability also if the grid has an outage, this is an option to substitute their emergency diesel generators. Power outages are quite common in Costa Rica and some companies fear that it will be worse in the future [84]. If this comes true this back up system powered by renewable energies could be an important element for green companies already very soon. ICE and other distribution grid operators With a larger extend of the Plan Piloto for decentralized electricity consumption, the selfconsumption of Costa Ricas population and its industry would rise, and less electricity would have to be purchased from the distribution grid operators. Therefore utilities fear to lose their clients, and try to hinder the development of the PV industry instead of supporting the decentralized power production. Decentralized power production benefits also utilities as grid losses can be reduced when the electricity is produced where it is needed. Currently, private generation companies are limited by the Law 7200 to 15 % of the national capacity for BOO (Build Operate Own) power plants in chapter 1. From this installable capacity, only 75 MW are left for new private owned projects at the moment [23]. The capacity available for BOT (Build Operate Transfer) projects defined in chapter 2 of this law has already been completely utilized [87]. Although the capacity for the private investors to install further plants is limited to 75 MW at the moment, first plants can already be installed. The new law of electricity, which is currently discussed in the MINAE, would increase the allowed share of the private operated capacity to 45 % of the total capacity. This would provide the private investors with the possibility to install several profitable PV power plants. ICE Generation therefore has to be careful not to miss the technology change as the four distribution grid operators in Germany did. Due to installed fossil fuel power plants that do not operate, for the reason of low stock market prices, they face heavy losses at the moment ICE and the other distribution grid operators have two opportunities to take advantage of the solar technology. One option is to take over the investment of the clients and install the required solar systems directly on their roofs. Utilities can gain the large economic benefits of the PV electricity that is produced close to the demand and without the necessity to search for available space. In return the electricity can be offered to the clients cheaper than what they currently pay, for providing the roof space. This would create a win-win situation for the client and the utility. The second option is to find cheap land areas close to locations of high consumption, and install bigger PV power plants there. Power plants with capacities of 1 to 10 MW can produce electricity significantly cheaper than small systems on small buildings. With lower generation prices, the electricity price can be lowered as well and make smaller systems from the clients less profitable. Hereby, the utilities can keep their

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6. Resume and Recommendations business of selling electricity. Potential locations for these large scale power plants are not only the locations of the highest demands in the northern part of the Central Valley, but also Guanacaste for the highest irradiation values. Also close to Limon and in the southern part of the country PV systems should be installed to reach a high dispersion in the system for leveling out fluctuations. ICE has already gained some knowledge of decentralized power generation with PV systems, as well as with operating a 1 MW power plant. It should go ahead and invest more in cheap solar electricity and stop thinking that solar energy is only suitable for rural areas. PV energy can be more than just an add-on to the electricity mix but an important source in the future. ICEs excuse, that the available space is very limited in Costa Rica and not sufficient to produce a significant amount of electricity from solar, cannot be supported. The proposed 600 MW would require approximately 10 km of land, which would equal less than 0.001 % of Costa Ricas surface. Parts of this can be installed on roofs of clients where the space is currently unused. Appendix 8 shows the map of Costa Rica with the small area indicated in red that would have to be covered with PV to produce sufficient energy to cover the demand of the entire country. Bavaria, which is only slightly bigger than Costa Rica, has already installed more than 10 times more PV capacity than needed in Costa Rica without affecting the space of living or the environment noticeable. Governmental institutions MINAE and ARESEP With law 697, from 2001, the Costa Rican government released all energy efficiency technologies and parts for renewable power sources, including solar, from custom charges. However, on the political level some effort is still needed to reach the goal of having electricity generated only by renewable energies by 2021. Simply defining this target for the state owned electricity generation company ICE is not sufficient. The Ley de la electricitdad, the new energy law that has been under discussion in the government already for several years, is still not approved. This should reform the whole energy sector and permit the private generators to increase their share of installed capacity in the country significantly. The main goal is a liberalized market, reduced electricity prices caused by more competition and the use of cheap renewable sources. Still, this law is far from being approved as it would bring substantial changings to the sector. A lighter version of this electricity law is the Ley de Contingencia elctrica. There structural changes are not outlined, but it aims to permit the private investors to install up to 45 % of the Costa Rican electricity generation capacity. This is a more promising proposal than the Ley de la electrictidad and discussed in the government at the moment. As the association of the private electricity generators is very interested in the profitable electricity from PV power plants, private investors could be the first ones installing big PV systems, if they get the necessary capacity reserves to do so. Furthermore, they need a regulated tariff from ARESEP, because contract negotiations between ICE and investors are not permitted. As the market is not liberalized as in Germany yet, trading is only permitted with ARESEPs permission. The tariff does not need to include subsides from the government because PV electricity in Costa Rica is very cheap. Defining a fair price is currently the task of a German consultant, who is contracted to help ARESEP. To avoid mistakes made in Germany and Spain, this price should be economically sustainable and therefore not be a fixed value. ARESEP is defining the electricity prices every quarter, and they should do so also for solar systems. It is important to take the specific installation costs, resulting from different PV system sizes, into account. At the moment, the electricity of big systems with more than 1 MW could be around 0.08 to 0.09 USD per kWh in Guanacaste as this would make

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6. Resume and Recommendations solar projects profitable but would not overprice the solar electricity on the other hand. With this price the solar projects would be profitable and the price for ICE would still be lower than what they pay for electricity from other sources at the moment. Smaller systems should receive slightly higher tariff as the investment costs are higher. However, the biggest financial benefit of PV systems is normally in the self-consumption. Additionally, this tariff should be related to the location where the system is installed to avoid large amounts in Guanacaste, where the irradiation conditions are the best, and fewer systems on the Caribbean Coast. This would lead in to higher grid stresses and higher fluctuations of the solar electricity injection. A 15 % higher tariff in the northern zone and on the Caribbean coast could compensate the lower irradiance there and make systems equally profitable in all zones of Costa Rica. In any case, the price that the electricity provider has to pay for solar electricity has to be fixed for at least 15 to 20 years to provide the necessary security of return for the investors. The government should also support the enhancement of the Plan Piloto of ICE. At the moment, the legal frame for the decentralized generation is not clear. The distribution companies except of ICE state; that are still not sure if they can introduce a plan similar to the one from ICE, as the laws are not clearly formulated regarding the decentralized electricity generation. A clarification of this, or the introduction of a similar plan for the whole country, would be very helpful. An option would also be, to introduce a modified plan, which permits the customers to inject their electricity into the grid and give them a credit of less than the 1:1 balance, which ICE performs right now. A healthy factor could be 1:0.75 for example. This would mean that for every 10 kWh of excess electricity the customer injects into the grid he can reuse 7.5 kWh in times of production shortages. Then the grid would work as a free storage with an efficiency of 75 %. The 25 % that the customers leave in the grid would be a profit for the grid operator for operating and maintaining the needed grid, which is superior of the costs for operation and deprecation of 19 % of the distribution costs at the moment [32]. Furthermore, this encourages the clients to aim for a high degree of self-consumption and grid stresses are reduced. In this improved plan the limits for the tariff change in the General Tariff have to be defined as well. With these regulations the government can enhance the solar installation significantly without any costs for them or the Costa Rican population. In fact, costs for the utility as well as for the customers would reduce due to the utilization of the free energy from the sun.

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7 Summary and Outlook


Although more than 90 % of the total electricity consumption in Costa Rica is generated by renewable energy sources, the electricity market cannot be seen as mature and developed yet. The rising electricity demand is bringing the main renewable power source in Cost Rica, hydro power, to its limits at the moment. The goal to achieve carbon neutrality by 2021 and electricity generation only from renewable energy sources has been established by the national government but a promising plan to achieve that, has not been developed yet. Two big hydro power plants are planned to cover the growing demand but will not go into operation before 2016. Until they go into operation, higher shares of fossil fuel usage can be expected, which would cause a strong price increase as seen in recent years. Solar energy is still largely underrepresented in the electricity mix due to its bad reputation and lack of knowledge about it. The lack of trustworthy irradiation data was resolved in this study. Four different sources of irradiance data were identified. Two are ground measurements and two state the irradiance conditions from satellite data. The comparison of the datasets proved the irradiation data from the GOES satellite to be reliable, and showed that the data processed by SolarGIS is the most applicable for Costa Rica. Yield estimations from the pvPlanner using the SolarGIS data resulted in an average error of only 3 % compared to the PV systems installed in the Central Valley. To underestimate rather than overestimate the PV production, a reduction of the data obtained from pvPlanner is recommended. A reasonable reduction of the irradiation was identified to be 5 %. Therefore, the corrected irradiation values vary from 1 250 kWh/m/year in the mountain tops to 2 000 kWh/m/year in the north-western part of the country. In the Central Valley, where the demand is highest, the irradiation is approximately 1 700 kWh/m/year, and on the Caribbean coast 1 600 kWh/m/year can be obtained. The countrys average specific annual yield of nearly 1 400 kWh/kWp/year is 40 % higher than the average output in Bavaria. After the high technical potential was assured, the monthly solar yield distributions were also investigated with pvPlanner for all climatic regions to see temporal and spatial fluctuations. The Pacific Region and the Central Valley have the highest outputs during the dry season, which in Costa Rica is from December to April. However, in the rainy season the output is only 20 % lower. In the northern part of the small country and on the Caribbean coast the weather is very distinct from the west coast, and solar systems produce more electricity from March to October than in the winter months. This contrary behavior leads to very low fluctuations of the countrys average, in which the difference between the two seasons is less than 10 %. For the high and the very constant yield throughout the year, solar systems in Costa Rica are significantly more beneficial than in Germany. The existing net metering option of the Plan Piloto from ICE permits solar systems to be installed cost effectively on roofs of households and medium size companies. Installation costs of PV systems in Costa Rica vary from 1.8 to 3.1 USD/W depending on the system size. With the high specific yield obtainable in Costa Rica, specific electricity generation costs of 7 to 13 US cents can be achieved for a lifetime of 20 years, considering all costs. For residential consumers with high electricity consumption, it takes 5.9 years until the money saved by a solar system matches the investment, even when

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7. Summary and Outlook calculating very conservatively. People with lower consumption (< 200 kWh/month) pay less for the electricity and therefore self-generation is less profitable. In these cases the time needed for economic recuperation can reach up to 11 years. Medium size companies in the General Tariff pay the highest rates for electricity and consequently benefit from the earliest break even points and the highest IRR. In some cases a tariff change to eliminate the costs of the peak power is possible. Positive ROIs after 5 years and an IRR of 23 % in 10 years can be reached. Risks from losses in savings can only be assured if the planning is done well. Without the tariff change, recuperation times are slightly longer and range from 6 to 8 years. In the Medium Voltage Tariff, companies have to wait longer for a positive ROI. Compared to the warranty of the modules of 20 years, the conservatively calculated recuperation time of 12 years is still a profitable investment. Even more interesting is the comparison to the lifetime of the system, which can be greater than three times the recuperation time. Furthermore, image and promotion benefits can make systems more attractive for companies. A decisive element for some companies could also be the ability to keep their production capability if the grid fails during daytime. In areas where the distribution grid operator is not ICE and the Plan Piloto cannot be applied, the situation is slightly more difficult. A more detailed demand analysis has to be performed to avoid electricity overproduction. This would make solar systems less profitable than expected as electricity is given to the distribution grid operator without compensation. This is especially problematic on weekends or holidays when the company is closed. Also smaller systems with resulting higher specific generation costs reduce the profitability outside the coverage of the Plan Piloto. Apart from the distributed generation by the electricity consumers, PV power plants operated by private investors or government hold generation companies can increase the share of solar in the electricity mix. This would be beneficial in order to substitute the combustion of fossil fuels for electricity generation. The installation of 600 MW homogeneously distributed photovoltaic capacity would be required to produce the same amount of electricity as the fossil fuels contributed to the electricity mix in 2012. This equals an average installation of 85 MW per year until 2021. However, the yearly electricity demand is expected to be nearly twice as high as today by 2021. Hence, the average annual installation has to be 150 MW to reach 10 % of Costa Ricas energy share, and to fulfill the target of substituting the fossil fuels from the electricity mix. The water reservoir of Lake Arenal, with its three power plants, would be the perfect counterpart for solar electricity to balance production and demand. In the dry season more solar electricity would be produced than needed. In these times the operation of the hydro power plants connected to Lake Arenal could be reduced to have sufficient water in the reservoir to provide the needed energy in the transition months. Also on the daily load curve the principal support of PV electricity can be observed. In the times of highest demand, around noon time, the solar systems contribute the greatest power to the grid. If 600 MW of PV capacities were installed, the thermal power plants could be switched off entirely during daytime, for solar electricity to be injected into the grid. At these times also the hydroelectric power plants can be operated on much lower levels. When the sun is down, this saved water could be used to cover the demand of the country. As many small hydroelectric plants can shift their power for a few hours, the plants connected to Lake Arenal would not be solely responsible for the balancing task during the night. Therefore problems of power availability should not occur; this could be confirmed by detailed analysis.

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7. Summary and Outlook The only requirement for future electricity generation, which contains solar power, is that people are made aware of all the aforementioned benefits. Furthermore, some more exemplary systems, as the one in Miravalles from ICE, should prove the theoretical values to be true. Governmental regulations, for example extending the Plan Piloto to the whole country, would lead to a further improvement of the situation. This does not need to be linked to any subsidies of the government or losses for the distribution grid operators. A modification of the Plan Piloto, for instance introducing an energy commission of 25 % of the injected electricity, would provide a benefit for the distribution grid operators to operate and maintain the necessary grid. For making the market more competitive the approval of the new energy law, which opens the market to 45 % share of private generators, would be another important step. If ARESEP defines a fair but economically sustainable tariff for PV electricity, private investors could then start installing bigger PV systems to produce electricity with lower costs. The mistakes made in Germany, regarding the overpricing and over-subsidizing of the solar electricity, have to be avoided under all circumstances, so Costa Rica can look into a sustainable energy future with lower electricity costs. This study presents the first quantitative analysis of PV electricity in Costa Rica. The results aim to be the start of the investigations and actions of different organizations in several fields. Table 14 summarizes these organizations and their relevant fields and identifies necessary steps to enhance the use of PV electricity in Costa Rica. Several investigations could be performed by universities in cooperation with local institutions in the form of another thesis or project. The validation of the SolarGIS model in this study could only be done with low quality measurements. If ICE implements its plan to install a few secondary standard pyranometers distributed throughout the country, a more accurate comparison can be done, and the SolarGIS model can be evaluated further. SolarGIS would be pleased to also contribute to this investigation with data and knowledge. One can also search in other Central American countries for irradiation data of higher quality to verify the conversion model. Theoretical results regarding the profitability of PV systems under the Plan Piloto have already been presented in this study; they will hopefully lead to some bigger exemplary projects so that actual values from the field can be analyzed and presented in the future. Outside of the Plan Piloto, the absence of load profiles is still a problem for the system design. The association Acesolar plans to install a few measurement devices in different houses to gain this important data. Also companies have to be encouraged to measure their demand more precisely than the distribution grid operators do to provide their specific load curve to the PV installer or a research group. A combination of detailed irradiance measurements and precise load curves makes analysis outside of the Plan Piloto possible for further investigation. This would also be important if a plan with commission-based net metering is introduced. In cooperation with ICE and the private electricity generators, more details about the existing power plants can be obtained to calculate the solar influence on the electricity mix more precisely than in this study. Not only power and energy reserves, but also downtimes, start-up times, resulting efficiency and other factors could be taken into account in a detailed model of the power plant portfolio of the country. Then, optimizations based on reliability, renewability and cost effectiveness could be performed with special software, considering all risks. In addition, a model of the grid could be created to see local stresses resulting from different types and locations of PV power plants. The best locations for solar power plants can be identified and required grid extensions quantified.

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7. Summary and Outlook Finally projects to provide technical and administrative support are essential for installers and the ARESEP in tariff questions. Support also has to be given to banks to resolve the big problem of financing PV systems. At the moment they assume significantly higher risks than are present in reality. Furthermore, the population has to be made aware of all these benefits to gain the necessary social acceptance to lead Costa Rica to sustainable green energy production.
Table 14: Summery of further investigations and actions necessary to enhance the use of solar electricity in Costa Rica.

Field Irradiance data

Description of necessary further investigation Installation of high quality ground measurement systems and constant maintenance of the sensors and irradiance data base Validation of SolarGIS data and its model with data of universities after one year and with measurements taken by ICE Searching in other Central American countries for high quality irradiation data in the region to improve the conversion model from the satellites

Possible organization ICE, IMN SolarGIS, University SolarGIS, ICE, GIZ Acesolar, CICR Acesolar, University University

Load profiles

Installation of load measurement systems in different households and companies. Analysis of this data in regard of temporal correlation between consumption and solar production Analysis of the profitability of solar systems outside of the Plan Piloto or with commission based net metering options

Electricity mix

Acquisition of power plant details in cooperation with ICE, ACOPE and ARESEP to create a precise model of the electricity generation system of Costa Rica Optimization of the system with respect to reliability, renewability and cost effectiveness

University University GIZ, University Company Acesolar Acesolar, GIZ Acesolar, GIZ Acesolar, GIZ, University Acesolar, GIZ

Grid Stresses

Creation of a model of the transmission and distribution grid to localize local stresses with different solar power plants Identification of the most profitable sites for solar systems and verification of the grid strength

Solar development

Installation of small sample systems for companies (50 kW500 kW) Tracking of changes caused by the new government, the electricity law and plans of ARESEP and the resulting possibilities

Education

Training of the installers in technical and economical tasks related to solar systems Technical support of banks for risk analysis to enable more people to receive loans Further assistance of the ARESEP to define a fair net metering option and feed-in tariff as soon as possible Promotion of the findings and benefits of solar to the population to eliminate the negative reputation and create more confidence into the technology

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List of Figures
Figure 1.1: Scheme of the study and its main investigated topics. ....................................................... 12 Figure 2.1: Displays the map of Costa Rica and its states, with the Gran rea Meteopolitana (GAM) indicated by the black contour. ........................................................................................ 14 Figure 2.2: Shown is the development of the Costa Rican net electricity generation since 1980, and three scenarios how it might evolve in the future [15] [2]............................................... 16 Figure 2.3: Depicted is the share of the electricity consumption in 2010 for each sector. .................. 16 Figure 2.4: Scheme of the energy sector in Costa Rica illustrating the relations between the institutions and companies. .............................................................................................. 18 Figure 2.5: Depicted are the shares of the technologies regarding the installed capacity and the generated electricity in Costa Rica in 2012....................................................................... 19 Figure 2.6: Shown is the change of used technologies for the electricity generation in Costa Rica since 1980 with the prediction until 2024 made by ICE. .................................................. 20 Figure 2.7: Shown is the average specific electricity price in US cents per kWh in Costa Rica over the last 10 years in black. The red curve is the trend line of the development curve [33]. ................................................................................................................................... 22 Figure 2.8: Map of Central America with the SIEPAC transmission line in blue [34]. ........................... 23 Figure 2.9: Transmission grid layout of Costa Rica with a detailed view of the GAM [25]. .................. 24 Figure 2.10: Areas of operation of the distribution grid operators on the map of Costa Rica and their shares of area, clientes, and sales on the total electicity consumption in 2010. .... 25 Figure 2.11: Shows the locations of ICEs off-grid PV systems for the electrification of rural areas, with a picture of the unit. ................................................................................................. 27 Figure 3.1: Displayed are the irradiation curves of the five representing weather zones in Costa Rica, measured on the ground (top) and by satellites (bottom). The average of the ground measurement stations is displayed in red, and the average of the satellite data in black, to see the correlation between the measurement technologies. ............. 35 Figure 3.2: Comparison of the uncertainties of different sensor types and reasons for uncertainties of SolarGIS data [57]. ........................................................................................................ 37 Figure 3.3: Comparison of the irradiance ground measurement of ITCR (in blue) with satellite data of SolarGIS (in red). ........................................................................................................... 37 Figure 3.4: Annual difference between the ground measurements of the IMN with the satellite data of SolarGIS in percent. .............................................................................................. 38 Figure 3.5: Shown are the maps of annual solar irradiation for Costa Rica, estimated by Jamie Wright in 2002 (left) and 2006 (right) in MJ/m/day. ....................................................... 40 Figure 3.6: Depicted is the map of yearly global horizontal irradiation in Costa Rica, created by using data from the resource data base SolarGIS from satellite data. ............................. 41 Figure 3.7: Shown is the Map of the GAM with the locations of the PV systems equipped with measurement devices, and the specific yield of the systems compared to the estimated one of SolarGIS. ............................................................................................... 42

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List of Figures Figure 3.8: Depicts the specific yield per month in the five climate zones of Costa Rica estimated by SolarGIS. The real measurements of six systems in the Central Valley are included in dark blue and the bars in gray indicate the average of all regions. .............................. 45 Figure 3.9: Presented is the Shell Solar Path diagram for San Jos, Costa Rica. The lines indicate suns position for every hour of the year. The elevation of the sun is indicated by the distance to the center. The azimuth angle of the sun can be observed by the radial angle. A more detailed description of the diagram can be found in Appendix 5. ............ 46 Figure 3.10: Compared is the specific daily yield of the modules facing to the south and to the north at the Lutheraner Church in the Central Valley of Costa Rica. ............................... 47 Figure 4.1: The Map shows the exemplary location for the calculations of the profitability of solar systems in different electricity tariffs. In the zoomed circle the exact location close to the airport can be observed. ............................................................................................ 49 Figure 4.2: Depicted is the monthly specific electricity production in Alajuela taken from the pvPlanner and modified with the 5 % safety margin. The red line indicates the annual average. ............................................................................................................................ 50 Figure 4.3: Depicted in blue is the ROI of the PV system depending on the installed system size in years and in red the IRR for the system............................................................................ 62 Figure 4.4: Average daily solar power in Alajuela divided in the three medium voltage price periods. ............................................................................................................................. 66 Figure 5.1: Displayed is the actual situation of the electricity generation in 2012 per month divided in the type of power plant used to cover the demand of Costa Rica [86]........................ 71 Figure 5.2: Demonstrated is the electricity generation per month divided by the type of power plant used. The left column represents the real situation in 2012 and the right column with an assumed PV installation of 600 MW. ...................................................... 72 Figure 5.3: Shown is the annual average of the daily demand curve. The power of each plant type is indicated in a different color [85].................................................................................. 74 Figure 5.4: Average daily demand curve of 2012 with the power produced by solar energy in yellow. ............................................................................................................................... 75

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List of Tables
Table 1: Comparison of properties of different irradiance data sources in Costa Rica. ....................... 32 Table 2: Indicated are the measurement periods of the long term measurement stations of the IMN at the examined locations. The red points indicate these locations on the map. ......... 33 Table 3: Shown is the average specific yield of the 5 climatic zones taken from the pvPlanner for the locations indicated in the map. ....................................................................................... 43 Table 4: Summarized are the specific costs of photovoltaic systems in USD/W depending on the system size in Costa Rica........................................................................................................ 51 Table 5: Summarized are the prices for the electricity generation of ICEs planned conventional power plants for Costa Rica in US cents per kWh [2] [78]. .................................................... 53 Table 6: Shown are the specific generation prices in US cents per kWh for solar electricity depending on the influence factors location and system size............................................... 55 Table 7: Indicated are the electricity prices for ICEs residential customers in 2013 in USD per kWh [68]. ........................................................................................................................................ 56 Table 8: Summary of the key values of PV systems for the residential sector. .................................... 59 Table 9: Shown are the electricity prices of ICEs General Tariff in 2013 in USD per kWh [68]. ........... 60 Table 10: Summary of the key values of PV systems for companies in ICEs General Tariff................. 64 Table 11: Summary of ICEs electricity prices in the Medium Voltage Tariff and their time of appliance. ............................................................................................................................... 65 Table 12: Electricity demand of the exemplary company during one year and the associated price. . 67 Table 13: Summary of the key values of a PV system for the exemplary company in the Medium Voltage Tariff.......................................................................................................................... 68 Table 14: Summery of further investigations and actions necessary to enhance the use of solar electricity in Costa Rica. ......................................................................................................... 85

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Appendixes
Appendix 1: Expansion Plan of Costa Ricas Power Plant Portfolio from 2012 until 2024.................... 96 Appendix 2: Locations of Installed and Planned Power Plants in Costa Rica ........................................ 98 Appendix 3: Location of the IMN Stations with the Sensor Type Used to Collect the Used Data ........ 99 Appendix 4: Global Horizontal Irradiation Map of Germany created by SolarGIS .............................. 100 Appendix 5: Detailed Explanation of the Shell Solar Sun Path Diagram ............................................. 101 Appendix 6: Ratios of Solar Production in the Peak Period and Off-Peak Period for Various Locations in Costa Rica .................................................................................................................... 102 Appendix 7: Development of the Storage Level of Lake Arenal in 2012. ............................................ 103 Appendix 8: Map of Costa Rica with the Area that has to be Covered by PV panels for Producing 100 % of its Electricity ..................................................................................................... 104

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Appendix Appendix 1: Expansion Plan of Costa Ricas Power Plant Portfolio from 2012 until 2024

Grid expansion plan of ICE


Demand
Year Energy [GWh] Relative Increase [%] Project
Colima Cubujuqui Valle Central 2012 10 087 Moin 1 CATSA Cutris El Plamar Tacares Toro 3 2013 10 605 4.9 Anonos Balsa Inferior Rio Macho Rio Macho Amplification 2014 11 151 4.9 Chucs Cach Cach Moin 2 Capuln Torito 2015 11 730 4.9 CC Moin 1 CC Moin 2 Chiripa 2016 2017 2018 2019 12 345 12 998 14 430 14 430 5.0 5.1 5.1 5.1 Geothermal Project 1 Diqus Geothermal Project 2 Hydro project 1 Wind Project 1 2020 15 212 5.1 Wind Project 2 Geothermal Project 3 RC-500 Geothermal Hydro Geothermal Hydro Wind Wind Geothermal Hydro 35 650 35 50 50 50 35 58.4 Reventazn

Production
Technology
Fossil fuels Hydro Wind Fossil fuels Biomass Biomass Biomass Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Hydro Fossil fuels Hydro Hydro Fossil fuels Fossil fuels Wind Hydro

Capacity [MW]
-14 22 15 -19.5 8 3 5 7 49.7 3.6 37.5 -120 140 50 -105 158 -130.5 48.7 50 93 93 50 305.5

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Appendix

As the annual energy and power demand is rising constantly with about 5 %, an extensive extension of the current power plant portfolio is required. The expansion plan of ICE has already defined many projects that should be realized until 2021. There the main focus is on the run of river power stations. Only the hydroelectric power station Reventazn will have a reservoir to store water up to one week. Negative installed powers indicate that this power plant goes off the grid. However, the fossil fuel power plants Moin 1 and 2, which are disconnected from the grid in 2012 and 2014, are improved and reconnected in 2015 with higher power. The same is improvement is performed with the hydroelectric power station at Rio Mancho. The next big geothermal power plant is scheduled to be connected to the grid in 2018. All planned biomass power plants are relatively small compared to the other projects and solar power is still not considered in the expansion plan of ICE.

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Appendix Appendix 2: Locations of Installed and Planned Power Plants in Costa Rica

Most of Costa Ricas hydroelectric power stations are located north of the Central Valley in the mountain range, as indicated with the green dots. Also south of the demand center several hydro power plants are installed. By the red lines, the connection between hydro power plants can be observed. As the generators are driven by the same rivers, one cannot operate if the others are turned off. The wind power parks and the geothermal power plants are indicated with blue and yellow points in the map. All these are located in Guanacaste, in the north western part of the country, where also the storage hydro power plants connected to Lake Arenal can be found. This high generation far from the demand center requires a strong grid. The fossil fuel power plants are shown in purple and operate close to Puntarenas, Limon and the Central Valley to produce electricity where it is demanded.

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Appendix Appendix 3: Location of the IMN Stations with the Sensor Type Used to Collect the Used Data

The measurement stations in orange (Laguna Negro, Puntarenas, Airport San Jos) were equipped with Li-Cor LI-200SZ sensors. The other stations indicated in purple in the map were operated with Kipp&Zonen SPLITE sensors. The reference points for the validation were elected by observing the data quality of the stations and the location. A large dispersion was desired to represent all climate zones of Costa Rica.

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Appendix Appendix 4: Global Horizontal Irradiation Map of Germany created by SolarGIS

The Map of Global horizontal irradiation of Germany created by SolarGIS indicated the best locations for PV installation for the country. In comparison with the map of Costa Rica the significantly better conditions in the Central American country can be identified. The scale of the map of Germany ends at 1 300 kWh/m, this is the value at which the scale for Costa Rica starts. This indicates that any location in Costa Rica receives more Global Horizontal irradiation than the best locations in Germany.

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Appendix Appendix 5: Detailed Explanation of the Shell Solar Sun Path Diagram

Sun path diagrams are a convenient way of representing annual changes in the path of the Sun through the sky within a single 2D diagram. The solar azimuth and the elevation of the sun can be read off directly for any time of the day and any day of the year. They also provide a unique summary of the suns position that the designer can refer to, when considering shading requirements and design options. This diagram was created for San Jos with the Shell Solar Sun Path Diagram software. Black concentric circles indicate the elevation of the sun. The center indicates an elevation of 90, so a solar radiation which approaches the earths surface perpendicular. Sun positions further away from the center, indicate a lower angle. At the outmost circle the suns height is 0, which is the case at sunrise and sunset. The 36 lines crossing the circles perpendicular indicate the azimuth angle of the sun in steps of 10. Usually the angle is measured from North, so East represents 90, South 180 and West 270. In San Jos the sun rises with an azimuth angle of 70 in July while in December the angle is 115. For every time throughout the year both angles can be observed by the blue and green lines. Therewith, blue indicates the first half of the year and green the second. The lines reaching from East to West represent the suns path at the indicated day. Finding the intersection of the daily horizontal curve with the colored vertical lines, which indicate the time of the day, gives the suns position. The angles can be read from the black lines subsequently.

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Appendix Appendix 6: Ratios of Solar Production in the Peak Period and Off-Peak Period for Various Locations in Costa Rica

Station AIRPORT; JUAN SANTAMARIA SAN LUIS, POAS LAGUNA, CAO NEGRO ZURQUI LOS LIRIOS UPALA ITCR, CARTAGO AIRPORT; LIMON FINCA ANTOLIN LAGUNA, FRAIJANES PUNTARENAS CENTROAMERICANA, GANADERIA RECOPE, LA GARITA

Production in Peak Period 36 % 36 % 33 % 34 % 34 % 35 % 36 % 33 % 35 % 37 % 35 % 36 % 35 %

Production in Off-Peak Period 64 % 64 % 67 % 66 % 66 % 65 % 64 % 67 % 65 % 63 % 65 % 64 % 65 %

Production in Night Period 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

For locations where at least one complete year of reliable data in hourly resolution was provided by IMN, the ratios of production were calculated. All irradiation energy measured during the two peak Periods during the year was summed up and compared with the total annual irradiation energy of this location. The same was performed for the off-peak Period. Fluctuations throughout the country are very low, but with this table they can be taken into account more accurate than before.

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Appendix Appendix 7: Development of the Storage Level of Lake Arenal in 2012.

The expected curve in green indicates that ICE planned to have by the end of 2012 more water in the storage lake than in the beginning of the year. For higher demands and less rain then expected the real curve, displayed here in red evolved differently. Although the storage was depleted less than expected in the first half of the year the level from January could not be reached again. As the storage cannot recover in the second half of the year it ends the year with 2 m less water than in the lake compared to previous year.

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Appendix Appendix 8: Map of Costa Rica with the Area that has to be Covered by PV panels for Producing 100 % of its Electricity

Solar system size to produce 100 % of the electricity consumed in Costa Rica in 2012

Costa Rica had a total electricity consumption of 10 TWh in 2012. With an average annual yield of approximately 1 400 kWh/kWp per year, a solar capacity of 7.2 GW would be required to produce the same electricity than consumed in the country. The size of a 1 kW PV system is assumed to be roughly 10 m, so the total needed area for this capacity approximately 71 km. This equals a square of less than 8.5 km of edge length as indicated in the map for 100 % solar electricity. As this approach only makes an energy balance, of course in realty this is not feasible due to storage problems. However, the recommended 10% of the nationals demand could be covered with an area 10 times smaller than indicated in this figure. At this point, once again it should be noted, that it is important to distribute solar systems thought the country and not concentrate them at one point. Furthermore the roof spaces of the buildings would provide sufficient space to install the most of this solar capacity.

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