The Renewable Energy Sector in Colombia

In response to the high dependency on water sources for power generation, Colombia has established a modern regulatory, institutional, and market framework to diversify its energy matrix, which will increase the installed capacity in alternative sources by a factor of 50 - from 50 MW in 2018 to 2,500 MW by 2022.

Why invest in the Renewable Energy sector?

Colombia’s global ranking in the generation of clean energy.

• Per the World Economic Forum’s 2020 Energy Transition Index[1], Colombia ranks second in the Americas and 25th out of 115 countries worldwide in terms of its capacity to supply quality energy in a self-sustaining, accessible and environmentally friendly manner.

Colombia’s projections in the development of renewable energies.

• CIn response to the high dependency on water sources for power generation, Colombia has established a modern regulatory, institutional, and market framework to diversify the energy matrix. Thanks to the latest energy auction and by using alternative energy sources, Colombia will increase its power generation capacity by a factor of 50, i.e., from 50 MW in 2018 to 2,500 MW in 2022. By 2050, renewable energy is expected to account for 25% of the country's energy matrix.

Colombia's potential for renewable energy resources.

• The country has a high potential to generate energy from non-conventional renewable energy sources (NCES) thanks to the availability of energy resources such as the sun (4.5 kWh/m2 daily average solar radiation, higher than the global average of 3.9 kWh/m2), the wind (potential to implement wind power plants of more than 25GW, with wind speeds in La Guajira twice as high as the world average), and biomass (enough potential to supply 46% of the national energy demand - over 500,000 TJ per year). Research projects for the generation of hydrogen as an energy source are currently underway.

The National Government has provided incentives for the development of renewable energy projects.

• Colombia offers incentives for the development of renewable energies, including a 50% income tax deduction for 15 years for investments in alternative sources. Energy from non-conventional sources sold by the producer are exempt from income tax; energy generation equipment imports are exempt from custom duties and VAT; and the acquisition of solar panels and solar generation equipment is automatically exempt from VAT.

Colombia’s recent experience in renewable energy auctions.

• Colombia awarded power supply contracts for a total of 12.05GWh/day; developers agreed to invest over USD 2 billion in non-conventional renewable energy (NCRE) projects in the renewable energy auction.

Investment opportunities in the Renewable Energy sector:

• There are more than 150 power generation projects registered at the UPME (The Mining and Energy Planning Unit) with Non-conventional energy sources (solar, wind, biomass), with an installed capacity of 10,166 MW. Some of these projects are open to strategic partnerships with investors who are willing to carry out the construction and operation of said projects. At ProColombia, we have prioritized 23 projects in 11 departments, deploying commercial efforts to connect developers with foreign investors.

[1] https://www.weforum.org/reports/fostering-effective-energy-transition-2…