Colombian developers hopeful as rate decision drags out

“It’s a bit early to put a figure on the current installed capacity, but what I can say is that there is a pretty favourable environment towards renewable energy ,” commented Julio Cesar Montero Rendón, director of Colombian Solar Systems.

Colombia is Latin America’s third-largest economy, with 48 million inhabitants and an average year-on-year gross domestic product growth rate of close to 5% over the last four years.

Said Montero: “Since the approval in May last year of the 1715 Law, whose objective was to promote the use of renewable energy, it only remains for the government to regulate the tariffs with which you will be able to negotiate excess generation from commercial, industrial and residential projects .”

The 1715 Law  specifically states that: “Small and large-scale self-generation owners are authorised to deliver excess power to the distribution and/or transport networks .”

While the rates that will be applicable for this have yet to be thrashed out, said Montero: “The projections are pretty optimistic ." 

“The market could accelerate as investors arrive and projects start to be mapped out, among other reasons because users are constantly complaining about the high cost of conventional energy .”

According to Marc Tremel, general manager of Colombinvest, Colombian energy prices are largely at the mercy of hydro reserves that account for more than 70% of the electricity mix.

“Last year, around Easter, the dry-season prices on the electricity market went above USD$0.20 per kilowatt-hour,”  he said. “This uncertainty has created a lot of panic in the electricity market .”

The situation is not helped by the fact that in 2014 some energy suppliers failed to stick to promised tariffs for large industrial customers, so the latter were forced to pay more than they had agreed.

“I believe the Government, with the 1715 law, wants to get rid of centralised generation systems like the hydro power systems and wants to move towards a new transition of distributed generation, ” Tremel said.

Rumours are currently circulating of a 150 MW solar project, although in the main Tremel thinks government-sponsored projects will not exceed 20 MW and will more likely be in the range of 2 to 3 MW.

Besides grid-connected projects, there is an opportunity for solar to power the approximately 5% of the population in Colombia that is completely off grid.

A lack of technical skills has prevented developers from taking full advantage of this market, with about 10 MW installed to date, according to Tremel. The market could be ripe for exploitation as the solar sector matures, however.

Overall in Colombia, Montero claimed: “We could say the challenges have been overcome, since the costs of PV are very favourable now and people are very aware of the benefits that this represents not just for the economic interests of the users but also for the environment .”

Colombia’s solar opportunities will come under the spotlight when the country hosts the Solar PV Trade Mission Central America & Colombia  event this November .

The event will combine a two-day conference on Central America and Colombia, held in Panama City, with two days packed with meetings as part of a high-level international trade mission delegation to Bogota, featuring up to about 30 companies.

It promises to be an important event for those interested in one of Central and Latin America’s most enticing emerging markets. “Colombia is a privileged country for its location a mere five degrees from the equator and its favourable levels of solar radiation ,” said Montero.

“There are no seasons, and it is very favourable for the development of different solar panel installations because they can guarantee high performance.”