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REGIONS AMERICAS


UNDERNORMALCONDITIONSHYDROACCOUNTS FOR85%OF TOTAL GENERATION, BUT, DURING EL NIÑO EVENTS, THIS SHARE FALLS TO65%


Anenergymakeover forColombia L


THE GOVERNMENT IS PUSHING RENEWABLES, BUT THE COUNTRY’S DRAWBACKS REMAIN, SETH O’FARRELL REPORTS


a Guajira, a region in north- east Colombia bordering Venezuela and facing the


Caribbean Sea, is the frontispiece for the country’s recent renewable energy boost. With an onshore and offshore wind potential sufficient to meet national energy demand, it is little wonder why.


The first wind project in the country was


installed in La Guajira: an experimental pro- ject called Jepírachi, which means “wind from the north-east” in the local Wayuu language. It was built by national company Empresas Públicas de Medellín and German wind tur- bine manufacturer Nordex in 2003. Over the past few years, the country has


accelerated its drive to attract foreign energy companies. Colombia expects to allocate roughly 5GWof renewable energy capacity at auction in January 2021, to be connected to the grid by the end of 2022. This follows another auction in October 2019, which awarded 2.2GW worth of solar and wind pro- jects at an average price of $0.027/kWh. Alongside feed-in-tariffs, bundled into the


government’s laundry list of incentives, are VAT breaks and corporate tax exemptions—all of which have made investing in renewables in Colombia very competitive. There were a record six renewable projects


announced last year with a total capex of $1.2bn, according to greenfield investment tracker fDi Markets. Previous years, from2014 to 2018, had recorded just one project per year with a capex of between $25mand $70m. Italian energy giant Enel currently oper-


ates Colombia’s largest solar plant, El Paso, located in Cesar with an installed capacity of 86.4MW. It also has 750MW of solar projects


60


and 500MW of wind projects in development and under construction. The Portuguese electricity utility company


EDP and US electrical power distribution com- pany AES have also established themselves in the country. Colombia displays great potential and prom-


ise. There is also a need for it tomove away from its reliance on hydropower, on account of the La Niña/El Niño twinned weather patterns that affect rainfall and bring about drought. But for all the country’s drive to diversify its energy mix by way of renewables, some political and practi- cal problems remain. Namely, disputes with local indigenous communities who can impede the construction of renewable projectsandweak grid transmission connections between coastal regions and the demand-heavy cities.


Endof fossil fuels Giancarlo Morelli, Latin America analyst at the Economist Intelligence Unit, expects that renewables will play a much larger role in Colombia’s future than fossil fuels — the latter, he adds, “has its daysnumbered”. This will enable the country to diversify its


economy while advancing its sustainable devel- opment goals, Mr Morelli says. More broadly, while the economic recovery


in 2021 will be primarily driven by improving private consumption and injecting dynamism into construction activity,hesays, Colombia will be able to attract renewable energy investors through its attractivebusiness environmentand green public policies. Rystad analyst David Dixon,whocovers Latin


America, recognises the recent renewablesboom as a joint effort to diversify the country’s energy mixandencouragea“security of supply”,hedged against the La Niña/El Niño phenomenon.


www.fDiIntelligence.com December 2020/January 2021


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