The Colombian energy ministry established new rules for the country’s second long-term renewables auction announcing on Wednesday that it will take place before the end of October.
After the first round failed in February this year, the ministry invited stakeholder feedback seeking to change the auction formula to one that will promote competitiveness in the power sector.
The second auction will be open to new generation projects with capacities greater or equal to 5 MW. In it, the ministry is introducing specific time blocks for which power generators and off-takers can make their offers. These periods are between 0001 and 0700 local time, 0701 and 1700 local time, and 1701 and midnight sharp.
Another novelty is the type of the contract, which the ministry calls “pay for what is contracted”. This means that the off-taker has to pay the generator for the contracted electricity regardless of whether or not it is consumed. The generator has to supply the fixed amounts of power during the agreed time block. The contracts will be signed in Colombian peso with adjustments tied to the producer price index. The supply period will run for 15 years starting January 1, 2022, when the generators have to begin power deliveries.
Colombia's national mining and energy planning unit UPME will announce the amount of energy to be auctioned after it receives offers from generators and off-takers. This time, there will be a ceiling price that bidder need to stay below if they want to be awarded a contract. This, and other measures designed to prevents the concentration of offers around a limited number of bidders, will be revealed later.
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