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    Energy transition with stable rules of the game


    December 6, 2022 - CE Noticias Financieras

     

      ISAGEN are allies of the institutions and remain committed to being key players in the acceleration of the energy transition proposed by the government of President Gustavo Petro.

      Wind farm in La Guajira.Photo: CourtesyMuch

      has been written about the situation with energy tariffs in Colombia and the world. In the country, thanks to the leadership of the Minister of Mines and Energy and in order to support an improvement in consumer charges, ISAGEN has been an important and proactive actor to be part of the solutions, together with other agents of the energy chain, who have been working together to generate strategies to alleviate the bills received by millions of Colombians.

      ISAGEN, for example, as an ally of the regulatory institutions and within the framework of the Pact for Tariff Justice, offered discounts to its portfolio of commercial customers that serve the regulated market, guaranteeing a real discount on the prices that will apply in the last quarter of 2022 and setting a maximum ceiling on prices in 2023.

      (Read: Challenges of the electricity sector in Colombia)

      The Colombian electricity market has enjoyed a stable regulatory framework that has supported the expansion of reliable electricity generation capacity in the last 30 years, the result of a construction process with the entities that govern the sector, and is moving forward in an energy transition that will guarantee greater reliability and fair tariffs, as is everyone's goal, led by ISAGEN, with two wind farms and two solar farms delivered in 2022 and a fully renewable generation matrix

      .

      UPME estimates indicate that future energy demand in Colombia should grow at around 2.5% per year. However, in recent years demand has grown around 5% and, in the future, the decarbonization of the country could increase these projections. However, today other actors in the chain are still very uncertain about the start-up of Hidroituango, the new transmission lines or the other renewable projects in La Guajira.

      (Read: Guaviare farmer traded cattle ranching for the mission of planting a forest)

      In a conservative scenario, the country would need plants that can deliver 2,500 GWh of energy, equivalent to between 600-1,500 MW of new capacity each year (depending on the technology chosen), to sustain the growth in demand. The sources of this expansion will most likely come from Small Hydroelectric Power Plants, SHP, or photovoltaic plants and the required investments would be in the order of 7 billion pesos per year.

      It is a challenge to achieve this expansion and ensure the normal supply of demand, ISAGEN is at the forefront of this objective and therefore continues to increase its clean generation capacity, although the macroeconomic environment is complex and international trends predict greater turbulence. For example, high interest rates and an accelerated devaluation have increased the cost of projects by nearly 40% in the last 24 months. In addition, a thermometer of this phenomenon was the last auction of long-term non-conventional sources contracts, which delivered energy prices 20% above the market.

      In order to achieve this expansion, it is essential that the Government and the private sector work together to ensure environmental licensing and its follow-up, as well as the timely and cost-effective construction and start-up of the required power plants and transmission. For our part, at ISAGEN we are allies of the transition and the institutions and we remain committed to being key players in the acceleration of the energy transition proposed by the government of President Gustavo Petro.

      (Read: A green treatment for gray water in Atlántico)

      Investment in large infrastructure projects requires stable rules of the game, with controlled adjustments. We must not lose sight of the fact that these are investments for more than 30 years that are based on the credibility of the agents, on a clear regulatory framework and the logic of a competitive market. The greatest asset that the electricity sector has is its institutional framework and we must not let the current situation lead us to make hasty changes, which in the long term may be costly for the country.

      If we want more competitive tariffs, the way forward is to expand the capacity of the System, so that it is resilient to climate change and diverse in its generation sources, taking advantage of the resources available in the country. For this, the regulatory and competitive conditions that support these investments must be ensured. Otherwise, tariffs will tend to rise and we will run supply risks that would be disastrous, as is already happening in Europe. We must remember that the most expensive energy is the one we do not have. The country already suffered from this in the early nineties. We are in time to take actions with moderation and good rhythm without wasting what has been built.

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