March 2021

Colombia Has High Potential for Renewable Energy

Holland & Knight's ENR ISG Quarterly Newsletter
Inés Elvira Vesga

According to the World Economic Forum's Energy Transition Index 2020, Colombia has made the greatest progress in the renewable energy area in Latin America and the Caribbean. In addition, Colombia has received two important international recognitions because of its commitment to energy transition. First, the United Nations (UN) chose Colombia as one of the seven countries to lead the global dialogue on energy transition at the High-Level Dialogue on Energy, which will be held at the UN General Assembly in September 2021. Second, Colombia was designated as a principal member of the Council of the General Assembly of the International Renewable Energy Agency (IRENA), representing Latin America.

Colombia has a privileged location for renewable energy. According to official records from the Mining and Energy Planning Unit (Unidad de Planeación Minero Energética or UPME), there is an average solar radiation of 4.2 kilowatt hours per square meter (KW/h per m2) per day in Colombia. For reference, countries with high solar energy potential have an average of 3.7 KW/h per m2 per day. There is also great potential in wind energy and biomass. The energy matrix currently has 68.3 percent from hydroelectric sources, 30.7 percent from thermal sources and 0.98 percent from nonrenewable sources.

Climate change is a latent threat to energy security because of the vulnerability of water sources, which is why the inclusion of renewable sources in the energy matrix has been promoted. The country's regulations for renewables projects were issued in 2017. In 2019, the first renewable energy auction was held with 2.2 gigawatts (GW) being awarded.

Currently, there are 14 solar and wind projects that will allow the country to increase renewables sources to 12 percent of the energy matrix. According to the UPME, in the near future there will be more than 8,902 MW in nonconventional source projects represented in 165 projects that should be in operation by 2022.

In 2021, Colombia will have its second renewable energy auction to allocate 5 GW of renewable energy capacity. Draft rules for this auction were published on March 3, 2021. The regulation establishes that projects with a capacity equal to or greater than 5 MW will be considered, as well as those with a capacity between 5 MW and 20 MW. Projects selected will have to be grid-connected by the end of 2022, and will be able to enter into 15-year power purchase agreement (PPA).   

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