Colombia fails to award renewable energy contracts

No power off-take agreements were awarded in Colombia's first clean energy tender because the results would have violated antitrust laws, the energy minister said.

Energy minister María Fernanda Suarez announcing the results of the auction on 26 February
Energy minister María Fernanda Suarez announcing the results of the auction on 26 February

Colombia’s mining and energy planning unit (UPME) was due to award 12-year power purchase agreements (PPAs) for 1,183GWh/year, but the results would have left too few companies with too much capacity.

The auction will now be re-run in the second quarter of 2019, the mines and energy ministry stated. It had earlier been postponed from January to February, after a new government took office.

Energy minister María Fernanda Suarez, however, said the low prices submitted in the botched auction would encourage more demand for clean energy in Colombia.

Some bids were below prices in existing power contracts between energy generator and utilities, she added.

"There was no award but there were data that made us very optimistic. For a long time there were people who thought that these technologies were going to be very expensive and yesterday we saw that this is not true," Suarez told local W Colombia Radio.

The auction pooled demand from utilities and distribution companies as well as invited bids from renewable energy developers.

In total, 12 purchase bids and eight sale bids were made, the energy ministry stated.

However, no contracts were awarded due to them "not meeting (Colombia’s) competition standards", the ministry added.

Brian Gaylord, senior analyst for Latin America at Wood Mackenzie Power & Renewables, told Windpower Monthly developers are unlikely to be deterred from competing in the re-run tender later this year.

"It was not a good result, but you often have these hiccups and organisational issues the first time around," he said.

"Because of it being (declared void due to) a technicality, it just requires a rule change and it should be sorted out."

He added that competitive prices were not surprising considering wind power’s cost reductions around the world and the good wind resource in the north of Colombia near the country’s Caribbean coast.

Gaylord expects wind projects to be built in the northern department of La Guajira – a remote, windy region.

However, project owners may face local opposition if development takes place too fast, he added.

Successful developers are due to sign contracts running from 1 December 2021, and Gaylord backed them to meet this start-date.

"With wind and solar, you can turn around and build it pretty fast, and 2021 is still pretty far out," he explained.

The auction is part of the Colombian government’s plans to increase its non-hydro renewable energy capacity from 50MW today to 1.5GW by 2022.

Colombia currently sources about 70% of its energy from hydro, and this leaves the country "vulnerable to climate variability", the energy ministry stated.

The country’s only operational wind farm is the 19.5MW Jepírachi site owned by public utility Empresas Públicas de Medellín in La Guajira.

The Global Wind Energy Council (GWEC) believes up to 500MW of wind power capacity could be added annually in Colombia, and by 2028 wind could provide about 20% of the country’s power.

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