XM comments on Hidroituango risk

Energy, Regulation & Policy    Oct 27, 2021 4:27 PM

XM’s General Manager, María Nohemi Arboleda, spoke about the renewable energy auction, and the Hidroituango case.

The expert told La Republica that the country will have to wait for the market reaction in case Hidroituango does not come into operation.

“The non-entry of Hidroituango would affect competition, but the important thing is that there are reserves. If it is delayed, we can still supply demand without a problem. It will depend on the agents,” Nohemi said.

Arboleda explained that the possible price increase will depend on how much demand grows, and the hydrological condition of the country at that time.

She said that in firm energy contracts the installed capacity of renewables and thermals is comparable to Hidroituango.

“We expect all these projects to come in between now and 2024. In thermal projects, just over 500MW of installed capacity will come in; and wind and solar projects will have approximately 2,500MW,” Arboleda said.

Arboleda said that the entity expects to close contracts in the next auction.

“We have great expectations because the interest has been high, which reflects great confidence. Many were waiting to participate and, in case another one is announced, they will be there,” Arboleda highlighted.

She explained that in case the government’s target demand is not achieved, there is the next day adjustment mechanism, which is a new regulation.

“If the target is not achieved and there is still supply available, the idea is that another auction will be held the following day and, if there is still a shortage, the Ministry of Energy stated that it will hold another auction later on,” Arboleda said.

She concluded by saying that there is no risk of shortage in the medium term in the country.

Bottom-Line: The energy sector is making large investments around the country, but companies need support and solutions on fundamental issues such as prior consultations.

The projects under development have the capacity to provide a margin of reliability while Hidroituango continues, but they have not been able to advance at the expected pace due to obstacles with prior consultations.

The government should remember that signing the contracts is only the first step, and awarding firm energy contracts will be of no useful if the companies cannot develop the projects…

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