New incentives for Energy Transition

Regulation & Policy, Renewables    Jun 22, 2021 6:58 PM

Congress approved a new Energy Transition Law, with more incentives for renewable energies.

Colombia will continue to position itself as a regional leader in this area and as an attractive country for investment in unconventional renewable energies, thanks to the new law recently approved, Portafolio reported.

“This law aims to consolidate the energy transition, lead the fight against climate change and accelerate the closing of gaps,” Minister of Mines and Energy (MinEnergia) Diego Mesa said.

Mesa explained that the law offers improved tax incentives for unconventional renewable energy generation, energy efficiency and sustainable mobility.

“These incentives extend to new technologies such as green and blue hydrogen, large-scale energy storage and smart metering,” Mesa highlighted.

The Energy Transition Law recognizes green and blue hydrogen as unconventional sources of renewable energy. (Although blue hydrogen technically is not renewable.) These technologies will be eligible for the tax benefits of Law 1715.

Incentives will be extended to investments and smart metering equipment, and their installation will have no additional cost for users.

Energy efficiency projects only had the benefit of income super-deduction, but now, these will be able to access zero tariffs and accelerated depreciation. The acquisition of goods and services for the development of generation projects with unconventional energy sources and efficient energy management will be excluded from VAT as well.

In addition, the government will create FONENERGÍA with the goal of articulating and focusing the different sources to finance and develop plans, projects and programs to improve the service quality, expansion of energy coverage and normalization of networks.

Bottom-Line: These incentives will be vital to start attracting investments and consolidate the growth of the renewable energy sector in the country.

Colombian authorities must make a better effort in key issues such as environmental and social licensing to advance in the development of projects satisfactorily.

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