Rules for Colombia’s renewable energy auction

Regulation & Policy, Renewables    Jul 12, 2019 6:55 AM


After we closed yesterday’s newsletter, the Ministry of Mines and Energy (MinEnergia) published the rules for the unconventional energy auction. Considering the importance of these rules for the Colombian energy industry, we decided to publish a special edition of the newsletter Here are the details from a MinEnergia statement, with translation by ePower Colombia.

Minenergía defines rules for the new renewable energy auction in Colombia

“Through resolutions 4-0590 and 4-0591 of July 9, 2019, the Ministry of Mines and Energy defined the rules for the new long-term renewable energy auction.

The auction, which will take place before the end of October this year, will only accept new generation projects from un-conventional sources of renewable energy (FNCER). The initiatives’ commercial operation will start after the award of the contract takes place, and should have an energy capacity greater than, or equal to 5MW.

Financially, the contract will function as a take-or-pay’ type, meaning that the buyer is obliged to pay the contracted energy to the seller, regardless of whether the marketer consumes it or not, and that the generator agrees to supply a fixed energy to the buyer during the established schedule.

In the definition of the new rules, we collected the observations and comments of the different stakeholders and sector agents, to find the best balance of conditions for both sellers and buyers, benefiting users.

The Energy Regulatory Commission (CREG) will set the maximum limit which determines the maximum value allowed to assign the contracts in the auction.

It will also define the conditions under which the auction is guaranteed to have adequate participation, assuring that transactions will not be concentrated in a limited number of agents.

The amount of energy to be auctioned will be defined as an objective demand by MinMinas, and will be revealed by the Mining and Energy Planning Unit (UPME) simultaneously with the maximum energy limit, after receiving offers from buyers and sellers who participate in the auction.

The start date of the electric power supply obligations will be January 1st 2022, and the term of the contracts will be 15 years.

In the coming days, MinMinas will publish the contract details that contain all obligations that sellers and buyers must meet once the auction is over.

About the product to be auctioned:

To adjust to the generation profile of the FNCER, MinMinas defined three time blocks for vendors to present their energy offers, as follows:

Block No. 1: From 00:00 hours and until 07:00 hours.

Block No. 2: From 07:00 and until 5:00 p.m.

Block No. 3: From 5:00 p.m. to 12 p.m.”

Disclaimer: Note that this is an unofficial ‘free’ translation for the interest of our readers and has not been checked by MinEnergia. Those interesting in participating should work with the original documents in Spanish or consult their local legal counsel.

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