Electricity sector in Colombia
A 2001 law designed to promote alternative energies lacks certain key provisions to achieve this objective, such as feed-in tariffs, and has had little impact so far.
[1] Thirty-two large hydroelectric plants and thirty thermal power stations feed electricity into the SIN.
This has happened in response to the 1992/1993 crisis caused by El Niño-Southern Oscillation associated droughts and the high reliance of power generation on hydroelectric installations that lacked multi-year storage capacity.
The expansion path involved adding 1,500 MW of new capacity, equally distributed between hydro and thermal sources, by 2011.
[4] As in other countries, the zones outside the interconnected system pose especially challenging conditions for electrification, as well major inadequacies in service provision.
The remaining three (EEPPM, ESSA and EPSA) are integrated companies that carry out all the activities in the electricity chain (i.e. generation, transmission and distribution).
[2] The three largest players in commercialization are Unión Fenosa (with Electrocosta and Electrocaribe), Endesa (in Bogotá) and Empresas Públicas de Medellín (EPM).
[1] Colombia has 28.1 MW installed capacity of renewable energy (excluding large hydro), consisting mainly of wind power.
[4] The first historical landmark in the establishment of electric supply dates back from 1928, when Law 113 declared the exploitation of hydroelectric power of public interest.
The system worked in a centralized manner, in which vertically integrated state companies maintained a monopoly in their corresponding regions.
The crisis was the result of subsidized tariffs, political influence in the state companies, and the delays and cost overruns of large generation projects.
The law and the decree contemplate important aspects such as the stimulus to education and research in renewable energy sources (RES).
Nevertheless, the program created under this law lacks fundamental aspects to impulse the development of RES significantly, such as a regulatory support system to encourage investment, the definition of policies to promote renewable energy, or quantitative targets for the share of renewable energy.
The regulated market, which is directly contracted and supplied by distribution companies, applies to industrial, commercial, and residential users with power demands under 0.5MW.
[7] By law all urban areas in Colombia are classified in one of six socio-economic strata, which are used to determine the level of tariffs for electricity, water and other services.
These cross-subsidies are almost entirely (approximately 98 percent) financed by consumers living in areas considered as being relatively affluent and who use more electricity.
[1] There are three different funds and programs that support rural electrification in Colombia, each established at a different time with different purposes, and all administered by the Ministry of Mines and Energy.
The fund was designed to collect a surcharge of US$0.40 per MWh of electricity sold to the wholesale market, which would yield approximately US$18 million per year.
Electrification projects also receive support from the Program for Network Normalization (PRONE) that draws its resources from the National Development Plan funds.
[11] Because of Colombia's abundant hydroelectric potential, greenhouse gas emissions are very low per capita (1.3 tCO2e) and per unit of GDP (0.2 tCO2e).
[4] The Latin American Energy Organization (OLADE) estimated that CO2 emissions from electricity production in 2003 were 6.5 million tons of CO2.
[12] Currently 30 percent of CO2 emissions in Colombia come from the power sector, but these could increase if thermal generation gains a larger part of the energy mix.
[4] As of August 2007, there are three registered Clean Development Mechanism (CDM) projects in the electricity sector in Colombia, with overall estimated emission reductions of 107,465 tCO2e per year.
[4] The other two registered projects are the Santa Ana Hydroelectric Plant, in the Bogotá's suburb Usaquén, with estimated emission reductions of 20,642 tCO2e per year;[14] and the La Vuelta and La Herradura Hydroelectric Project, in the Antioquia Department, with estimated emission reductions of 69,795 tCO2e per year.
[15] The Inter-American Development Bank has currently one energy project under implementation in Colombia, the Porce III Hydroelectric Power Plant, owned by Empresas Públicas de Medellín and approved in October 2005.
[16] In addition, the IDB is supporting the Colombia-Panama electric interconnection project through US$1.5 million financing for the feasibility studies phase.
