| Colombia | Jul 29, 2020
With Colombia's gas reserves set to run out in a decade and El Niño weather patterns affecting its hydroelectricity production, Colombia must look to renewables to provide a more diversified energy mix.
Colombia’s beautiful landscape offers more than scenic photo opportunities. More specifically, its sunshine, which can shine almost 12 hours a day in certain areas, offer it a valuable renewable energy source. Furthermore, it has one of the two areas in Latin America that receive Class 7 winds, blowing at 10m per second annually on average. However, these energy sources have thus far been largely untapped by the country. Colombia’s energy portfolio already features a large amount of “clean” energy: 70% of the country’s energy needs are met by hydroelectricity. However, as such energy can be undone by the El Niño weather pattern, it is of vital importance that the government diversify its energy portfolio.
Fortunately, this is exactly what the government currently has in mind. Under the watchful gaze of the Ministry of Mines and Energy (MME), the country has adopted its Indicative Action Plan, which targets having 6.5% of on-grid and 30% of off-grid generation coming from renewable sources by 2020. As such, the government has also put in place several laws, decrees, and tax benefits to drive the sector itself and to offer incentives to businesses willing to switch their energy sources.
Law 633 of 2000 created the Financial Support Fund for Energy Provision in Non-Interconnected Zones (FAER). The goal of this fund is to finance project in areas not connected to the national grid. The law also sets up a fund that will help finance initiatives in non-conventional energy with public and international resources. For those looking to invest in renewable energy projects, they can receive a 50% annual deduction of taxable income for the first five years following the investment. Furthermore, equipment and machinery needed for this sector are excluded from the country’s VAT. If such equipment is imported, it will also be exempt from customs duties.
What energy offerings does Colombia have in mind? Wind is seen as the most potent of Colombia’s renewable sources. La Guajira, located on the country’s Caribbean coast, offers excellent wind conditions. Furthermore, it is also exceptional for its solar capacities. Indeed, Colombia registers some of the highest rates worldwide in terms of solar irradiance, according to ABB Latin American President Ramon Monras. Additional departments that also offer great solar potential are Atlántico (also found on the Caribbean coast), Antioquia (found in the country’s Northwest in the Andes region), and Valle del Cauca (found in the country’s southwest on its Pacific coast).
This may be why AES Colombia has decided to build the largest self-generation solar park in Colombia, Castilla Solar Park. The company is “currently working to provide sustainable and competitive energy solutions to the most important consumers in Colombia,” as stated by its general manager, Federico Echavarría. In line with this goal, the company has acquired Jemeiwaa Kai, the country’s largest wind development project, in an effort to create Colombia’s most sustainable and competitive energy portfolio, according to Echavarría. The company plans to reach 2,000MW of energy production by 2025 and 3,000MW by 2030, if its investments play out well.
Another sector in the renewable energy area is biomass fuel, yet another energy creator that Colombia is uniquely placed to provide. According to a 2013 research done by the Dutch government, 44.6% of Colombia’s arable land is used for agriculture. Main farming activities include bananas, flowers, cotton, and cattle, all of which are great providers of biomass for fuel needs. The only thing missing is know-how, a necessary component to driving entrepreneurship in this area. In order to harness the power of these traditional sectors, the current administration would do well to introduce incentives for foreign companies with the appropriate know-how to invest. Furthermore, it could offer state-funded program to send engineers to learn from other countries, such as the US and Brazil. One thing is for certain: Colombia is poised to be a leading example for the world in terms of renewable energies.