Is Colombia the Next Opportunity for Photovoltaic Solar?

Time for action in Colombian PV market!

By Pradeep Chakraborty

Solarplaza recently held a webinar, titled PV in Colombia.  Marc Tremel, GM, Colombinvest, discussed distributed generation (DG) as a trailblazer. Colombinvest provides solar EPC (IPP) for 0.1 MW up to 1.5 MW. It also has +25 PV projects realized YTD (~ 0.23 MW).

As for the DG marketing in Colombia, there are distributed generation for residential (< 10 kWp), commercial (< 100 kWp), and industrial (< 1 MWp). The current market size is around 20 MW DG plants that have been built, and around 100 MW DG in pipeline.

Major regions developed include:
* Center region (Andina) -Bogota and surroundings
* Coastal region –Barranquilla and surroundings
* Pacific region –Cali and surroundings
* Further development in other regions of the country.

Important regulation in place are the CREG 030 (March 2018). Under this, there is
< 100 kW net-billing without“C” (Commercialization) of the whole energy tariff (about 85-90 percent of the wholesale price). In 100 kW and 1 MW, the net-billing is only with “G” (Generation) price (about 30-40 percent of the wholesale price). In above 1 MW, there are same rules, but stricter measurements (irradiation measurements) on an hourly basis on-site, and stricter grid rules.

In CREG 015 (March 2018), in < 100 kW, there is no obligation for backup contract. In above 100 kW, the obligation to sign backup contract with grid operator, and value is dependent on the project and the grid operator and costs.

Grid operator regulation CREG 030 gives new obligations to each solar system. Every single solar system requires a full RETIE (local electrical code) certification. However, RETIE does not include any specific PV section.

Most “common practice” is copied by NEC 2017 or some European codes. By exporting energy to the grid, the timing for the grid operator approval > 30 days. Even the systems <100 kW require an hourly energy measurement. Before grid connection is approved, an utility inspector makes on-site visits.

As for the major players in the market, they include Celsia (Grupo Argos), EPM, Codensa (ENEL Group), and smaller utilities (Vatia, EMCALI, etc.) among utilities. International EPC companies such as Panasonic, Green Yellow, and several mid-sized companies are present.

Challenges and opportunities
Some key challenges in the market:
* No long-term energy contracting in Colombia. PPA for 10 years or less.
* Local knowledge about solar is still lacking (especially on the authority side).
* Grid operators, UPME, ANLA require too much bureaucracy (too high administration costs).
* No clear rules about technical requirements -> no real “RETIE standard”.
* Grid connection studies require too much time.

Some key opportunities in the market:
* There is still space for well-positioned international players (EPCs, IPPs).
* Very interesting market space for distribution companies.
* Spreading commercial plants (< 100 kW) with interesting PPA models.
* Industrials are just waking up.
* New government can be helpful to push things ahead.

Renewables set to gain traction
John Padilla, MD, IPD Latin America, said that under the incoming Duque administration, renewables are finally set to gain traction. Are we able to successfully move away from “La Mermelada” [Editor’s note: La Mermelada refers to government corruption]

Colombian President, Ivan Duque’s priorities include reduce economic dependency on the extractive industries, promote renewables and protect environment. (Promote Orange Economy).

Resolution 40795 /2018, January 2019 auction was executed a week before the end of the Santos administration. It defines and implements long-term power contractual mechanism. It outlines auction guidelines, requirements and conditions. There are take or pay contracts, and PPAs of 10, 15 or 20 years. It was signed five days before the end of the administration. The UPME should publish the auction conditions by October 2018.
Minimum of 10 MW projects are required. Regardless of technology, there should be several participants.

Maria Fernandez Suarez, Minister of Mines & Energy, has said that the government is committed to continue with the auction process approved at the end of the Santos administration. Will the Duque administration be willing to take on vested interests to permit more commercial terms for renewables?

Understanding of local dynamics is vital. Key stakeholders identification and engagement strategies at national, regional and local levels is a must.