Brookfield says Colombian power assets hit by 'arbitrary' renewables cap

Global investment firm Brookfield Corp. has accused the Colombian government of violating its international obligations by proposing to limit the amount of renewable energy that power generators can allocate to spot contracts. 

A draft decree issued by the mines and energy ministry stipulates that plant owners can sell no more than 5% of electricity from solar, wind and biomass plants in the wholesale market for immediate or near term delivery.

In a leaked letter addressed to commerce, industry and tourism minister Luis Carlos Reyes, Brookfield secretary general Swati Mandava described the move as a breach of core legal principles. 

“The measures... contravene the standards of protection to foreign investment to which Colombia committed under international instruments,” Mandava said. “They disregard the principles of free competition, free contracting, and free development of activities.”

He also labeled the spot-market sales cap as “arbitrary and unjustified discrimination against renewable energy generators.”

Mandava concluded the letter by requesting a meeting with the minister to "remedy" the situation, adding that Brookfield reserved its rights under international agreements.

Brookfield is the majority shareholder of Colombian power generator Isagén, whose portfolio includes 19 power plants totaling 3,000MW of installed capacity. 

The government has described the draft decree as a necessary step to protect consumers from higher electricity rates, particularly during times of drought, when spot prices soar due to lower hydroelectric generation. 

Generators say the spot market is crucial to the profitability of their operations as it allows them to manage surplus energy, respond to real-time price signals and diversify their income streams. 

Brookfield's letter is the latest in a series of concerns raised by investors in Colombia's power sector, which is grappling with a liquidity crisis, a looming natural gas deficit and severe renewable energy project delays. 

In December, EDP Renewables announced it would sell two Colombian wind farms totaling 500MW of capacity, saying the projects had been rendered unviable by regulatory, political and economic obstacles.

Celsia, Enel Colombia and EDF have also said they are considering selling wind and solar assets in the country over the past year.

(This article has been corrected to clarify that the measures are part of a draft decree, not an official decree as previously stated).