As a result of auctions, Colombia’s share of energy from solar and wind is expected to increase the country’s energy resilience and cultivate low-carbon development.
First Renewable Energy Auction
USAID supported Colombia’s first renewable energy auction in February 2019, assessing the energy sector, drafting regulatory documents, and tailoring the auction design to Colombia’s unique needs. USAID also coordinated with Bloomberg New Energy Finance to hold events in Bogotá and New York City focused on attracting U.S. private sector developers to bid in the auction. Approximately 150 companies participated in the events, demonstrating strong commercial interest in the Colombian opportunity. USAID developed an online library to house key auction documents (in English and Spanish), rules for bidder participation, and the contracts to be awarded to winning bidders. Throughout the auction process, USAID monitored trends and innovations in global auctions and conducted study tours and workshops to help participants benefit from best practices. Despite high participation rates, the government did not award contracts because the auction’s competition criteria were not met.
Second Renewable Energy Auction
With support from USAID, the Government of Colombia conducted its second auction in 2019 which awarded contracts for seven projects that are scheduled to become operational by 2022. The second auction mobilized an estimated $1.3 billion in private capital and secured around 1.3 gigawatts of new wind and solar PV capacity with a cost of about $28 per megawatt hour (MWh). The projects will reduce greenhouse gas emissions by more than 11 million tons of carbon dioxide equivalent (tCO2e) through 2030 and create around 5,000 local construction jobs. This was a positive step toward the diversification of Colombia’s installed generation capacity, with solar photovoltaics (PV) and onshore wind shares expected to increase from less than 1 percent in 2019 to about 12 percent by 2022.
Official Twitter account of the President of the Republic of Colombia
Tetra Tech. 2021. USAID Support for Renewable Energy Auctions. Colombia’s Clean Energy Future. Washington, D.C.: United States Agency for International Development. https://www.usaid.gov/pa00z2rz
Third Renewable Energy Auction
On October 26, 2021, the Government of Colombia hosted its third renewable energy auction with support from USAID. The auction’s competitiveness increased with several companies new to the country winning projects for the first time. Contracts were awarded to 11 solar projects totaling 796.3 MW of capacity at an average price of approximately $40.56/MWh. While these prices were above the 2019 auction, they were still 15 percent below the average market price. The price increase was expected as a result of the supply chain disruptions affecting the global solar market due to the COVID-19 pandemic. The projects are estimated to mobilize an investment of approximately $875 million, with operations expected to start by 2023. The electricity generated from these plants is estimated to reduce emissions by approximately 465,000 tCO2e per year while providing about 4,700 local jobs. Colombia Minister of Mines and Energy Diego Mesa publicly expressed appreciation for USAID’s support on October 28, 2021.
Seguimos consolidando la #TransiciónEnergética. Logramos más energía solar con la #Subasta2021 y ya hemos multiplicado x 100 veces la capacidad renovable no convencional de 2018. Agradecemos el apoyo de @USAID y todo su equipo @SamanthaJPower @PowerUSAID @JohnKerry @ClimateEnvoy. pic.twitter.com/E1w6C2HkIz
— Diego Mesa (@DiegoMesaP) October 28, 2021