Why Colombia is on the radar of renewable energy developers

Developers of non-conventional renewable energy (NCRE) projects in Colombia have been buoyed by regulations that aim to lessen the country's reliance on hydropower, a consultant told BNamericas.

The government has promoted private sector investment in the NCRE segment since passing a law in 2014 that granted fiscal incentives and promoted the implementation of demand-side management systems.

Last month the energy ministry announced that an NCRE-heavy auction for long-term power supply contracts would be held in January, the first of its type in the Andean country.

Read EARLY STAGE AND UNDER CONSTRUCTION RENEWABLE PROJECTS IN COLOMBIA

"These regulatory advances – together with the ability to offer more competitive prices that has become evident in recent times – have significantly increased interest among developers of these projects in Colombia," said Bogotá-based consultant Andrés Izquierdo.

Under the regulatory overhaul, taxable income has been halved for the first five years of investment in NCRE projects while developers are also exempt from import duties and VAT.

Meanwhile, Izquierdo said delays and cost overruns associated with the Hidroituango mega dam (pictured) meant Colombia needed to accelerate plans to diversify the energy mix, around 70% of which comes from hydropower.

"The Hidroituango crisis represents opportunities for all other sources," he said. "First, [new] projects will be required to cover the firm energy imbalance and, second, because Colombia needs to reduce its dependence on water resources to strengthen the generation of energy," he added.