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Main aspects of the energy market in Colombia

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Hemberth Suarez's picture
Founding Managing Partner OGE Legal Services

Hemberth is an attorney and partner at OGE Legal Services. He is a Master's Degree in Renewable Energies. He is a specialist in electricity and gas regulation, energy mining law, domestic...

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  • Nov 17, 2020
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Law 143 of 1994 establishes the legal framework for the generation, interconnection, distribution and commercialization of electric energy. Also, this regulation contains the general rules by mean of which the Government guarantees the energy as a public utility.

a. activities

The four activities regulated by the Electric Energy Law can be summarized as follows: (i) Generation, (ii) Transmission, (iii) Commercialization and (iv) Distribution.

The transactions in the MEM are carried out under the following modalities:

  • transactions in the energy spot market;
  • bilateral financial contracts; and
  • Auctions to allocate the firm energy obligations under the reliability charge scheme, regulated in Resolution CREG 71 of 2006.

b. generation agents

Under Colombian Law, the energy generation activity can be carried out by the following generation agents whom operate based on different modalities:

  • Large plant generator.
  • Minor plant generator.
  • Self-generator: Individual or company that produces electric energy exclusively to service its own needs and can be classified as small scale generators (installed capacity of 1 MW or less) and big scale generators (installed capacity of 1 MW or above). Self-generators may or may not be the owner of the generation system.  The small scale generators will be subject to the operation rules contained on Resolution CREG 30 of 2018. According to Resolution CREG 24 of 2015, generation surplus of big scale self-generators can be sold within the MEM.  For these purposes, and in order to have access to the SIN, the self-generator has to be represented by another generator or a commercialization company before the MEM.
  • Co-generator: Individual or company that produces energy using a co-generation process and that may be or may not be the owner of the co-generation system.  Co-generation means a process of combined production of electricity and thermal energy, which is an integral part of a productive activity.

c. Conventional and non-conventional sources.

Electric energy can be produced in Colombia from conventional and non-conventional sources. Conventional energy sources, which are the ones mainly used in the country, are hydroelectric and thermoelectric. This last can be either produced from coal, natural gas or liquid fuels. Nowadays, around the 70% of the energy produced in Colombia is provided by hydro energy plants.

Non-conventional energy sources, regulated by Law 1715 of 2014 are those which have not been largely developed in Colombia and are considered sustainable from an environmental stand point. In turn, non-conventional energy sources may be renewable or not renewable. For example, nuclear and atomic energy are considered non-conventional and non-renewable sources of energy.  As per the non-conventional renewable sources, Law 1715 brought the following categories:

  • Biomass energy.
  • Tidal Energy.
  • Small hydroelectric projects.
  • Wind Energy.
  • Geothermic energy.
  • Solar energy.

 

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Matt Chester's picture
Matt Chester on Nov 17, 2020

Are there any new, recent, or pending regulations for Colombia that are looking to boost and make possible more renewable energy installations? And what are the main renewable sources utilized in the country? 

Thanks for sharing, Hemberth!

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