Authorities talk next energy auction

Regulation & Policy    Jul 23, 2019 4:55 PM

The Ministry of Mines and Energy (MinEnergia) and Colombia’s Energy Mining Planning Unit (UPME), announced that the next renewable energy auction will take place on October 22nd this year.

Five months after the first energy auction took place in the country (a process that essentially failed because no contracts were awarded), MinEnergia confirmed that this new auction includes several changes.

This, not only with the aim of promoting a greater participation of investors, but hoping to reach 1,500 MW of installed capacity, El Heraldo said.

Unlike the previous process, the new auction includes eight new modifications; the allocation of energy contracts by blocks, the extension of contracts from 12 to 15 years, and the opportunity for 5MW projects to enter the process, among others.

“We gathered the observations and comments of the different interest groups and industry experts, to find the best balance of conditions for both sellers and buyers,” MinEnergia María Fernanda Suárez told La Republica.

Germán Corredor, director of the Association of Renewable Energies (SER Colombia), said that Colombia has a great potential to develop unconventional renewable energy projects, “but, above all, it has the pressing need to complement its electricity matrix and strengthen it.”

The expert added that the change from 12 to 15 years in the contracts will help the financing scheme be more viable and accessible for companies that need financing.

Bottom-line: We rather see the lack of awarded contracts in the previous energy auction as a ‘half full glass’ situation, hoping that considering their inexperience in the award of unconventional energy projects, authorities took note of what to do and what to rule out, when thinking of re-launching the auction.

It is clear they listened.

We just hope the bureaucrats did some scenario gaming to play out how the auction might occur. That was at least one of the missing pieces of analysis last time. Experts predicted it would fail. The government did not see that until it was too late.

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