Colombia
Analysis

The reasons for Colombia's renewable energy gridlock

Bnamericas
The reasons for Colombia's renewable energy gridlock

Almost half of Colombia's wind and solar power projects due online in the next two years are running behind schedule as the country's clean energy transition continues to stall, a new study shows.

Some 119 renewable energy projects – excluding hydropower – are due online in 2024 and 2025, of which 46% are mired in technical or environmental permitting processes, according to the document published by industry association SER Colombia.

It said developers would almost certainly need to request deadline extensions with energy ministry planning unit UPME, tasks that could take up to nine months to complete. 

"It is striking that the processes with UPME reflect a multiplier effect in procedures that slows down the entry of projects, generates uncertainty and overloads the said entity," the report said. 

Initiatives totaling 510MW of capacity are currently awaiting approvals from UPME while another 425MW of projects are seeking to meet requirements set by departmental licensing authorities knowns as CARs.

Grid operators have processes pending for 186MW of capacity, national environmental licensing authority ANLA for 100MW, the interior ministry for 70MW, national infrastructure agency ANI for 20MW and road authority Invías for 10MW, SER Colombia said. 

Permitting information was not available for projects totaling 266MW while 691MW of developments had no processes pending.  

The causes for delays in processing times, according to the report, include: an absence of regulatory response or a failure of entities to meet legal timeframes; a lack of standardization in evaluation criteria, especially concerning CARs, and a requirement for developers wishing to change startup dates to initiate new procedures with UPME.

SER Colombia also cited poor communication and slow response times from entities, especially CARs, and the unwillingness of some authorities to embrace new technology to make their processes more efficient. 

"On average, the start of operation of a small-scale project takes between three and six years," the report said. "These entry times would be reduced by half if the regulatory processing deadlines were met, and terms were defined for permits that do not have them."

According to the 11-page document, the bureaucratic hurdles facing project developers have made financing more difficult. 

Around 53% of Colombia's existing renewable energy projects have yet to secure energy supply contracts or financing agreements. 

SER Colombia said that in the vast majority of cases developers are only able to obtain financial backing or power purchase agreements that guarantee the viability of their projects after the permitting stages are complete. 

"The current context of high interest rates...an increased tax burden, regulatory uncertainty and long procedure times can be burdensome, especially due to the already limited profitability of these projects," it added. 

The full report, in Spanish, can be seen here.

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