Building Colombia's energy future: The role of gas, renewables and hydropower

Colombia's energy sector is facing myriad challenges amid growing doubts about the future of hydropower, severe delays to renewable projects and fears of an imminent natural gas shortage. 

Andrés Canela, CEO of construction and engineering firm Schrader Camargo, tells BNamericas about the company's existing portfolio of energy projects, highlighting its entry into the solar segment and emphasizing the importance of new gas-fired power capacity. This is the first of a two-part interview.

BNamericas: Could you tell us a bit about Schrader Camargo's role in Colombia's electrical expansion and your view of the sector today?

Canela: We’re working on projects with various types of energy currently being developed in Colombia. We believe there’s room for different energy sources to have a future here. Sure, there’s a major focus on non-conventional renewable energy, but we also think there’s both the potential and need for projects that still rely on other fuel types.

On the topic of gas, we believe the country will eventually start new projects, and we know there's a clear need. When we talk with clients and industry leaders, we hear that Colombia still needs gas generation. That’s why we've been working alongside our clients, ready to support them when these investments become a reality.

For large hydroelectric projects, we’re already working on one. We think it will be challenging to build big hydro plants in the coming years, but we do believe that Colombia has an important path ahead in PCHs [small hydropower plants to continue adding hydroelectric power to the system.

Globally, large hydro plants are still viable, but I think for many years, it’s going to be difficult to build more of these in Colombia, despite its significant potential. Hopefully, we’ll find a way to make more projects happen; in Medellín, they’re discussing studies on new hydro projects.

BNamericas: And what about non-conventional renewable energy projects?

Canela: We’re looking for ways to do more non-conventional renewable energy projects. That’s where the country is headed and where most projects are now. We’re convinced that this development will be hugely important for Colombia. Large investments are needed to bring that energy to where it’s needed.

Beyond Colombia's efforts in distributed generation, it’ll be a major challenge to get that energy from where it’s produced to where it’s in demand.

We expect the number of projects to continue rising. For example, Bogotá’s metro, expected to be operational in 2028, will require a huge amount of energy, significantly increasing Bogotá's demand. There’s a need not just to generate that energy but also to get it to the city.

We’re also seeing a major need for investments in electrification since, without a doubt, demand will continue growing. We’ve prepared to play a key role in constructing these projects and to support our clients in building them.

BNamericas: Distributed generation investments have surged in countries like Brazil and Mexico, but the segment hasn't yet taken off in Colombia. What’s Schrader Camargo’s perspective on this?

Canela: Our main focus has been on large projects in thermal, hydro and solar energy. Of the last three gigawatts added to the Colombian system since early 2022, we’ve been involved in more than half. Our central focus has been large projects, but in the world of distributed generation, I would expect Colombia to see a boom as current regulations make it easier to be self-generators.

Today’s regulations allow projects below a gigawatt to enter relatively easily. In many parts of Colombia, the economics behind these projects already work. We’re seeing that these projects can come online without much difficulty. They’re increasingly easier to understand and model. It’s just a matter of time for capital to start moving at the speed needed to support these projects.

The challenge after that is how to ensure [full energy availability] for certain areas. You can’t rely solely on solar power unless you have some kind of storage or a grid connection. I think that’s what’s next, and we’re already seeing projects in Colombia that have storage components.

BNamericas: Can you tell us about the main projects, aside from Hidroituango, that Schrader Camargo is working on?

Canela: The biggest project under construction that we have in power generation is a 360MW solar park, and it’s going very well.

We think our clients increasingly understand the specific challenges of constructing these parks. This partnership between client and builder enables projects to move smoothly.

We’re also working with six clients on projects set to start construction next year. We believe we can become a key player in non-conventional energy projects.

Additionally, we’re hoping the terms of the upcoming auction [for firm energy obligations] will allow the development of the new capacity the country needs.

BNamericas: A pressing issue with this auction is the gas shortage for supplying new thermal capacity. Is this something Schrader Camargo is concerned about?

Canela: Industry and trade associations have expressed a significant need to increase gas availability in Colombia. We understand that gas will have to come from somewhere, as Colombia’s projected gas production won’t be enough to meet demand. For that reason, there will be a need to import gas via terminals capable of receiving and storing gas from abroad.

As for Colombia’s new gas sources, everything new is offshore, and the timelines seem a bit distant.

There are numerous regulatory measures under discussion to mitigate the impact of the gas deficit. We hope the best decision is made for the country.

BNamericas: Could you tell us a bit more about the 360MW project?

Canela: It’s currently under construction and is called Puerta de Oro, located in Cundinamarca near Bogotá. The owner and manager of the project is a Brazilian fund called Patria, and we’re the hands making sure the solar park is built.

BNamericas: Are the other six projects large-scale?

Canela: Two of the projects are large-scale, that is, over 150MW. Another two are between 100MW and 150MW, and the remaining two are under 50MW.

We hope to be the ones to build at least two of those. We’ve already been working with clients to be their partner in construction.

We’ve rethought a continuous improvement framework focused on how we can enhance the entire process of building solar parks, optimizing timelines and reducing waste to lower costs. We’ve found that the opportunities are immense.

We’re looking to pass these improvements on to our clients, and we’re optimistic that the best practices we’re implementing will positively impact these projects. And that’s not just from a cost perspective but also in providing certainty on timelines.