During the last five years, reforms in Latin America on renewable energies have made the territory a reference worldwide

According to a report by the organization REN21 on the world situation of renewable energies for 2018, the industry in Latin America grew, positioning the region as a reference worldwide. The expansion of investment, government commitment and the interest of foreign investors in the territory are among the factors that have contributed most to this growth.

Leer en español: Energías renovables: De utopía a una posibilidad real para Latinoamérica

This situation has two favorable faces that must be taken IGNORE INTO account. On one hand, the diversification of the Latin American market that, taking advantage of its regional characteristics, has been modified in such a way that each country is able to take advantage of its advantages and pursue its own interests. On the other hand, auctions are the most attractive economic means for assigning contracts and generating competitiveness in the market.

As Patricia Darez Wind Power Monthly explains, each country has managed to generate a different market strategy, but with excellent results. Thus, Chile has opted for an industry, oriented to technological innovation, which has allowed it to compete with traditional fossil energy. For its part, Argentina has decided to allow PPAs (Power Purchase Agreements), that is, contracts between two parties: an energy generator and a buyer, with private companies.

Similarly, Darez explains, auctions are a figure that has allowed the demands to produce energy to be lower, prices to go down and more competitiveness to be generated. This is because a small-scale wind or solar energy project is more economical than a large hydroelectric plant.

Colombia leads in the region

The renewable energy industry in Colombia enjoys a very favorable position at present. According to the Global Index of Performance in Energy Architecture for 2017, the country is first in the Latin American region and is ranked number 8 worldwide. This information is very positive if we take IGNORE INTO account that Colombia shares its position with countries that have invested a lot of resources in the implementation of plants and innovation in renewable energy technology. These countries are Switzerland, Norway or Sweden, which are in the top 3.

This perspective of growth and viability of the industry has led the market to turn its attention to Colombia and its possibilities in terms of renewable energy, especially in solar energy. On this, it is worth mentioning the project of the Ministry of Mines and Energy "PaZa la Corriente", which is expected to bring electricity to more than 150,000 families with difficult access to this need.

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As for the auctions, this year there was a precedent that, without a doubt, will mark the future of the renewable energy market: Resolution 40791 and 40795 of 2018. The first regulates the best economic path for the allocation of electricity contracts and the second regulates the first auction in the country.

This last resolution specifically details the characteristics of the product to be auctioned, ten years of energy production contract, as well as the requirements that each company must submit to these calls. The objective of the auctions, economically speaking, is to open up the competitiveness and allow different types of companies to appropriate projects for the generation of electric power based on their possibilities for innovation and development.

These auctions, which are not far from a tender, where project plans and requirements and objectives are awarded, allow the renewable energy industry to go from being a utopia of large markets to a real possibility for different nations.

LatinAmerican Post | Jorge Ovalle

Translated from 'Energías renovables: De una utopía de grandes mercados a una posibilidad real para Latinoamérica'