Colombia reschedules renewable energy tender for October

Nation to try again to kick-start a 500MW a year renewable energy market through auctions

Colombia will offer hourly-based power deals at a renewable energy tender that has been rescheduled for the fourth quarter of this year.

The tender will contract large-scale power projects – starting at 5MW – in 15-year, Colombian peso-denominated PPAs starting in January 2022. The government says the tender will be held “no later than the end of October”.

“The long-term tender is another fundamental step ... in our aim to diversify, complement and promote the competitiveness of the energy mix, making it more resilient to climate change and bringing in the reduction CO2 emissions to protect the environment,” said Colombia’s energy minister María Fernanda Suárez.

In the coming days the government plans to publish draft PPAs and start the tender process.

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The new tender comes five months after the country’s first attempt to contract renewables failed, as bidders failed to meet minimum antitrust requirements.

The tender is considered key for the Ivan Duque administration to deliver the promised 1.5GW of non-hydro renewables by the end of his term in 2022. The aim to is to reduce Colombia's dependence on hydroelectric generation after droughts led to a power crisis in recent years.

With 20GW of wind and solar potential each, Colombia is seen by local renewable energy association SER as a 500MW-a-year market.

The tender rules announced by the energy ministry comes after months of studies and public consultations to improve the process following the failure in February.

Apart from extending the PPAs to 15-years from 12-years, the government has introduced a fixed PPA through which the offtaker has to buy the power contracted. Under the previous rules, the consumer only paid for power that it effectively consumed.

The hourly PPAs will allow power generators to sell power in three blocks: from midnight to 0700, from 0700 to 1700 and from 1700 to midnight.

In Latin America, only Chile has similar hourly PPAs, which allow a greater diversity of contracts, and opens the way to hybrid projects or portfolios owned by the same company.

Colombia currently has just 19MW of wind operational and 85MW of PV out of a total power base of 17GW, which is over 60% hydroelectric.

In February, the government contracted 1.2GW of wind and 238MW of solar PV in a technology-neutral tender for peak-time contracting.

But the main renewable energy tender had lined up interest from the main global renewables, which registered 1.5GW of projects, three times the 500MW that the government planned to contract in the stalled process.

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