Colombia is on track to publish final terms of a tender for long-term power purchase agreements (PPAs) from renewable sources by the end of June, deputy energy minister Diego Mesa told BNamericas.
An auction will then be held within 90 days – in line with a draft resolution published last month – as the government attempts to jump-start investment in wind and solar generation projects.
«Our goal is to have all the rules in place – including the different resolutions and the contract model – with the tender published and set by June 30,» Mesa said. «We’re thinking of [giving companies] between two and three months to prepare their offers.»
A new tender process was launched after the government failed to award contracts at the country’s first renewables auction in February because results would have breached antitrust rules.
Proposed changes to the tender include the allocation of hourly blocks for electricity supply, similar to a model currently used in Chile.
«We think that with that change the uncertainty on the demand side about the viability of non-conventional renewable energy is going to be reduced significantly,» Mesa said.
In addition, the government plans to extend contract periods and peg 60% of product prices to the US dollar, minimizing currency exposure for lenders and developers.
«We’ve discussed this with international banks and they think that it’s a step in the right direction. We think that the generators are also happy with this hybrid system,» Mesa said.
Non-conventional renewable (NCRE) sources such as wind and solar power currently account for less than 50MW of Colombia’s 17GW installed capacity.
The government says the new auction will pave the way for 1.5GW of NCRE capacity, helping to mitigate risks associated with the Hidroituango mega-dam project, which has been delayed by construction problems.
Mesa also underlined the importance of natural gas in the country’s future power mix as the government seeks to allay concerns about the sporadic nature of renewables.
«Gas plants have a critical role in what we call this energy transition because obviously due to the viability of these sources, natural gas is a backup source that we need to make sure is in the system,» he said. «One thing that we are exploring is how these generators that have these natural gas plants can offer coverage for renewables that are intermittent.”
The first of a two-part interview with Mesa can be read here.
Diego Mesa will take part in the South America Energy Series (SAES) Colombia 2019 gas and renewables summit in Bogotá on June 20 and 21. More information about the event can be seen here.