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Renewables debut in Colombia firm energy auction



By Argus

Petroleumworld 03 05 2019

New solar and wind projects debuted in a firm energy auction yesterday in Colombia, putting the country onto the map of renewables that have swept across Latin America in recent years.

The auction resulted in awards to 70 power generation projects, of which almost 1.4GW will come from new solar and wind projects.

The government celebrated the outcome following a disappointing 26 February auction for long-term supply contracts that was geared toward renewables. No contracts were awarded because minimum criteria for competition were not met.

Nearly 15pc or 37.37GWh/d of the 250.55GWh/d in firm supply awarded in yesterday´s auction will come from new projects, including solar, wind, natural gas and hydro plants. The balance will come from 47 existing power stations.

The renewable winners include six wind farms with 1,160MW of total installed capacity in La Guajira department, and two solar projects with 238MW of capacity in Cesar department.

The auction ensures supply through 30 November 2023. Peak demand in the 2022-23 period is estimated at 226.84GWh/d.

The new projects will boost the country´s generation capacity by 23pc to 4,010MW from its current level. But controversially, 2,400MW of that is slated to come from the stalled HidroItuango hydroelectric project on the Cauca River in Antioquia department. The project was close to completion last year when a series of perilous structural flaws were discovered.

The project, which is controlled by public utility company EPM, nonetheless was allowed to participate in the auction and won a contract for 3.1GWh/d of firm energy.

Disgruntled coal-fired generators, already facing financing challenges, had withdrawn from the competition in which they said they could not compete.

The new projects require $3.5bn in total investment, of which $1.5bn alone will come from the new solar and wind projects.

"This auction was a success as it makes the electricity sector more resilient, more secure and more diverse while lowering prices," mines and energy minister María Fernanda Suarez said.

The government is seeking to install 1.5GW of alternative renewable capacity by 2023, from a current 50MW.

The generators will be paid $15.1/MWh for firm energy starting on 1 December 2022, 11pc lower than the last firm energy auction price of $17.1/MWh but higher than the almost $14/MWh in a 2008 auction.

But if the projects come on line earlier than 1 December 2022, electricity and gas regulator Creg will pay as much as $17.1/MWh, said Maria Nohemí Arboleda, director of wholesale market operator XM.

Italy´s Enel was a top winner in the auction. Of the 1,398MW in new renewable projects, its subsidiary Emgesa is already building the 86.2MW El Paso solar plant for $70mn in Cesar province. Enel Green Power won with three wind farms: 200MW Tumawind, 200MW Windpeshi and 99MW Chemesky, all located in La Guajira department in northeastern Colombia.

New gas-fired units include the 234MW closing of the open cycle of Termocandelaria, which is supplied by imported LNG. In addition, 150MW will come from TermoYopal new units 3, 4 and 5 and 190MW from El Tesorito of Proelectrica.

Another 180MW of new hydro projects will come from the 120MW Miel 2 and 60MW Alto Porce.

Around 70pc of Colombia's generation currently comes from hydroelectric plants.

"The firm energy auction proved to be a natural mechanism to expand electricity capacity. It was so successful that even renewable projects decided to participate," Alejandro Castañeda, director of the Colombian thermal generators chamber Andeg.



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