While Germany generated around 55.9 percent of its electricity from renewables in 2025, Costa Rica achieved 98.6 percent. This Central American country, roughly the size of Bavaria, recovered almost completely from a climate-induced decline the previous year and demonstrates that near-total decarbonization is possible even without industrial-scale resources.
Volcanoes, Rain, and Wind as Energy Sources
Costa Rica combines geographic advantages no European country possesses in this combination. Rain-rich volcanic slopes with steep drops enable hydroelectric plants. Along the volcanic chain lie geothermal fields. High elevations host constant trade winds. Tropical latitude provides year-round solar radiation. According to the Instituto Costarricense de Electricidad (ICE), approximately 76 percent of 2025 electricity came from hydro, 12 percent from wind, and 11 percent from geothermal, with biomass and solar making up the remainder.
Critically, this system was built over six decades. The first state hydroelectric plant opened in 1958. The ICE Group as state-controlled utility has since continuously invested across all renewable sectors, largely independent of which party held office.
2024: Drought as Stress Test
The El Niño phenomenon hit Costa Rica hard in 2024. Months of rainfall deficit lowered reservoirs to critical levels; renewable share fell to 86 to 91 percent. Thermal fossil-fuel capacity stepped in as buffer.
That 2025 recovery to 98.6 percent happened so quickly speaks to the robustness of the diversified system. Pure hydroelectric countries like Paraguay, which sources almost all electricity from the Itaipu Dam on the Brazil border, are more vulnerable to droughts because no alternative renewable mix buffers the shortfall.
In Comparison: What Other Nations Have Achieved
Few countries maintain similar quotas. Iceland has produced nearly all electricity from geothermal and hydro for decades, consistently exceeding 99 percent. Norway covers over 95 percent from renewables, around 89 percent from hydro alone, and expands wind capacity. Denmark reached 95.9 percent from wind and solar in Q3 2025 according to Eurostat, but fluctuates more with wind availability. The EU average stands around 46 percent renewable electricity generation. Germany reached 55.9 percent in 2025 and ranks among more active members, but maintains substantial coal and gas capacity as reserve. Costa Rica has largely completed this transition and exports surplus electricity to neighboring Nicaragua, Honduras, and Panama.
New Pressure Point: AI Data Centers
The existing model faces a new challenge. U.S. and European tech companies increasingly invest in data centers in Costa Rica for stable electricity with certified green origin. According to the Tico Times, ICE internally warned in early 2026 of capacity constraints: AI infrastructure power demand grows faster than new renewable capacity comes online. Through 2030, Costa Rica plans roughly 600 megawatts new capacity from geothermal, solar, and wind installations. Whether that suffices depends on how many data centers actually settle.
What Limits Costa Rica's Success Elsewhere
Two factors of the Costa Rican model don't transfer. First, geography: without volcanism, tropical rainfall, and favorable wind conditions, the same mix is unrealizable. Second, institutional continuity: ICE Group pursued stable investment strategy over 60 years, structurally more difficult in privatized electricity markets.
What transfers is the underlying principle: diversification. No country sustainably exceeding 90 percent renewable generation relies on a single technology. Iceland combines geothermal and hydro. Norway supplements hydro with growing wind. Denmark relies on wind supplemented by biogas and pumped storage. Costa Rica's rapid recovery from El Niño drought shows that the broader the technological mix, the more stable the system during extreme weather.
For Germany, managing its coal and gas exit, the practical lesson is clear: a system relying predominantly on a single renewable source requires massive storage capacity as compensation. Multiple independent sources, as Costa Rica combines them for decades, is the more robust model.