Energy auction: no winners, more challenges

Electricity, Regulation & Policy, Renewables    Mar 5, 2019 7:22 AM

Colombia’s first long term energy auction did not give the results expected by the Minister of Mines and Energy (MinMinas). What comes next?

The government is still planning to go from less than 1%, to between 9% and 10% of renewable energies in Colombia’s energy matrix, reason why a second energy auction will take place before June 30th this year.

Authorities expect a greater participation from both generators and marketers this time around, El Espectador reported.

The news came in after MinMinas confirmed that no energy projects were awarded during the auction that took place last week.

For MinMinas Suarez, the problem was the so-called ‘competition criteria’ defined by the Energy Regulatory Commission (CREG), which forces players to comply with high standards of Participation, Dominance and Concentration.

“There were enough participants in the process, but they did not pass the ‘Dominance’ or ‘Concentration’ test. We made sure that there was a lot of competition, and that led to no awards, but it is a process that continues on the road to being successful,” Suarez explained.

For the Colombian Association of Electric Power Generators (Acolgén), the auction showed great interest by market agents and “left a record of important investor trust to develop un-conventional energy projects in our market, one of the most reliable and sustainable in the world.”

Meanwhile, the director of the Energy Mining Planning Unit (UPME), Ricardo Ramírez, admitted that bidding in Colombia “is complex,” but highlighted that the auction represents a milestone for the Colombian energy sector, with an important participation by both purchase and sale energy actors.

The government expects to increase the participation of clean energy sources in Colombia’s energy matrix, going from 50MW (which is what a small city like Ibague needs) to 1,500MW (which cities like Medellín and Cali require together), before 2022.

Bottom-line: Looking at the bright side, this was the country’s first long term energy auction and although it did not give any results, it taught the government valuable lessons to be considered for future auctions.

Maybe authorities were not ready to handle the process, after all, and that is fine. We just hope they took note of what went wrong…

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