Energy prices increase

Energy    Jan 12, 2022 9:14 PM

The average energy exchange price has increased in recent weeks, generating concerns in the industry.

The benchmark closed on average at CoP$105.2kWh in November 2021, but this metric increased to over CoP$300kWh since December 14, reaching as high as CoP$491.1kWh in recent weeks, Valora Analitik reported.

The report explained that around 20% of regulated demand and 10% of unregulated demand is exposed to exchange prices.

Óptima Consultores said that this jump in prices was mainly due to water availability. However, this is not the only cause, as the behavior of market players also plays a role.

“The level of water reserves in December 2021 has been one of the highest in history due to the high rainfall brought by ‘La Niña’ phenomenon and the declared water availability has increased in recent days,” the company said.

However, inflows have reduced in the last two weeks; although they have not reached levels like those witnessed in January and February 2021.

Optima said that this was due to an alert issued by the agencies that calculate the “reservoir reference path,” which consists of a call for hydroelectric plants to store energy in their reservoirs.

“The only way to store more energy in the reservoirs of a hydroelectric plant, if it does not have sufficient water contributions to compensate its generation, is to stop generating at full capacity, which triggered prices that increased to reach a maximum of CoP$579 kWh on December 21,” the company said.

It is expected that, with the announcement of a season of abundant rains for the first quarter of 2021, the situation of high prices will not be prolonged, “under the rational that the contribution compensates for the speed of disbursement of the system”.

Bottom-Line: This behavior is further proof that the country needs to continue diversifying its energy matrix, because despite having high levels of water reserves, prices have increased.

Colombia has the potential to produce energy from different sources, and it seems like it is only a matter of time before the country has an energy matrix less dependent on hydro generation.

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