Unfeasible generation projects

Company News    Aug 2, 2021 7:57 PM

The sector has shown its concern because some generation projects, awarded by the government to back up the Hidroituango contingency, were not viable.

Four thermoelectric plants and one run-of-river hydroelectric plant (without reservoir) were declared unviable, El Tiempo reported.

These projects will not comply with the firm energy obligations awarded in the reliability charge auction after the Hidroituango contingency.

The PW-CON3 project did not even pass the phase of definitive guarantees and was left out since 2019, as well as the Termocaribe 1 power plant, which also failed to comply with this obligation.

XM executed the guarantees for construction and start-up of the Termosolo 1 and Termosolo 2 projects, two thermal power plants planned to be built in Buenaventura.

The guarantee executed for the first plant amounted to US$15.8M, while the other was for a little more than US$8.5M.

The Energy and Gas Regulatory Commission (CREG) declared the Miel II project to be in serious and insurmountable non-compliance for the start-up of operations.

XM said that the five plants added together had a generation capacity of 644.79MW, equivalent to 14.3% of total capacity of the new and special plants assigned in that auction.

Andeg’s Alejandro Castañeda said that it is necessary a punctual follow-up of the balance in terms of firm energy to know if the energy demand can be fully covered due to this situation.

“According to our estimates, the situation gets a little more complicated in 2022 and 2023, and we will review whether for 2024 and 2025 we need to call a reliability charge auction for new or existing projects to expand generation capacity,” Castañeda said.

CREG’s Jorge Alberto Valencia told El Tiempo that the entity is doing the corresponding analysis and so far no critical situation is visualized.

“Conditions are changeable, and that is why we are constantly monitoring the variables that affect the energy balance in the medium and long term,” Valencia highlighted.

Bottom-Line: The entry into operation of Hidroituango is still very uncertain and now the backup projects did not meet the minimum.

This is the result of rushing the processes and awarding projects quickly without developing the proper analysis.

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