Colombia schedules first renewables tender to beat hydro woes

Latin America's fourth-largest economy finally set to join wind and solar era to reduce reliance on drought-stricken dams

Colombia has scheduled its first renewable energy tender for 26 February, in a long-awaited move that could open a 500MW a year market in Latin America's fourth-largest economy.

The government’s energy planning authority UPME has published final tender rules and PPA contracts, and is now ready to start the pre-qualification process.

The tender regulations, finalised following a public consultation period, specify that 1,183GWh a year of power will be contracted for 12 years starting from December 2021. The Colombian peso-denominated PPAs are expected to be signed by the end of March.

Before the consultation, the energy ministry said it wanted to contract 3.4TWh annually through local currency-denominated 10-year PPAs starting in January 2022. Although the amount of power to be contracted a year was reduced, the PPAs' tenures were lengthened. Investors favoured deals denominated in US dollars with 15 to 20-year terms, as seen in Argentina and Mexico.

Bidders will compete on price, with other factors such as security of supply and ability to complement the nation's existing energy mix also taken into account.

New Colombian government confirms 1.5GW renewables push

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With less than 20MW of wind operational and even less utility-scale solar PV in its 17GW national generation park, Colombia is the last of Latin America's medium-to-large-scale economies to implement long-term renewable energy policies.

The tender was announced in early 2018 by the predecessor of the current government. But it was kept on track by the Ivan Duque administration, as the country’s 20GW-plus wind and even larger solar PV potential is now seen a way out of a recurring power crisis caused by drought-stricken hydro-dams that account for over 70% of Colombia’s power supply.

Since Duque was sworn in in August 2018, the government has repeatedly reaffirmed plans to build 1.5GW renewable energy capacity by the end of his four-year term.

Colombia has attracted the interest of several international players, including OEMs such as GE and Vestas, and global investors in renewables such as Enel

The Colombian environmental authority has already conceded its first license for a large scale wind project – the 200-250MW Alpha project sponsored by European group Renovatio – and is appraising licenses for at least another three wind and three solar projects.

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