Renewable infrastructure developer
Renewable infrastructure developer
Business Model Description
>Develop renewable energy projects securing land rights, interconnection rights, building permits, and property tax agreements and other requirements in non- interconnected areas.
Expected Impact
This initiative intends to reduce the inequality in the access to energy and diversify the energy matrix towards renewable sources.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
Sector Classification
Renewable Resources and Alternative Energy
Development need
>44% of green gases emissions in Colombia come from energy related activates that comprise the burning of fossil fuels in manufacturing, transportation, oil&gas industries.
>Less than 1% of the country's energy sources come from non-conventional renewable sources (1) (2).
Policy priority
>According to the National Energy Plan 2020-2025 sets the target of diversification of Colombia's energy matrix to be 12-20% non-conventional renewable sourced by 2050 (2).
Gender inequalities and marginalization issues
>86.3% of households led by rural women have access to electricity whereas 96.3% is the national level (3).
Investment opportunities
> Auto generation through non-conventional generation sources, generation for non-interconnected areas and renewable energy auctions (4).
Key bottlenecks
> Colombia has a heavily concentrated energy matrix and new technologies are costly for private investors due to the low development of the non conventional renewable market.
Alternative Energy
Development need
>44% of green gases emissions in Colombia come from energy related activates that comprise the burning of fossil fuels in manufacturing, transportation, oil&gas industries.
>Less than 1% of the country's energy sources come from non-conventional renewable sources (1) (2).
Policy priority
>According to the National Energy Plan 2020-2025 sets the target of diversification of Colombia's energy matrix to be 12-20% non-conventional renewable sourced by 2050 (2).
Gender inequalities and marginalization issues
>86.3% of households led by rural women have access to electricity whereas 96.3% is the national level (3).
Investment opportunities
> Auto generation through non-conventional generation sources, generation for non-interconnected areas and renewable energy auctions (4).
Key bottlenecks
> Colombia has a heavily concentrated energy matrix and new technologies are costly for private investors due to the low development of the non conventional renewable market.
Solar Technology and Project Developers
Pipeline Opportunity
Renewable infrastructure developer
>Develop renewable energy projects securing land rights, interconnection rights, building permits, and property tax agreements and other requirements in non- interconnected areas.
Business Case
Market Size and Environment
> USD 1 billion
> 25%
> It is expected that in the year 2020 values of 75,338 GWh will be reached (an increase of 11.2% compared to the year 2017) and 11,187 MW of maximum power.(5) > The average cost of energy is US $0.08 kWh (6) making for a US $6.0bn market.
> Renewable energy installed capacity in the country has grown by 82% since 2020 (17).
Indicative Return
> 25%
Accoring to local investors interviewed, they expect IRRs over 25% for non-conventional renewable energy generation.
Investment Timeframe
Medium Term (5–10 years)
Accoring to local investors interviewed, expected holding periods for non-conventional renewable energy generation are around 5 to 12 years.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - High Level of Competition
Market - Highly Regulated
Impact Case
Sustainable Development Need
> 18k deaths in Colombia (8%) in 2016 were attributed to environmental risk factors.(7)
> The annual cost to health of contamination produced is 1.5 trillion pesos (USD $ 790 million), equivalent to 0.8% of the Gross Domestic Product.(8)
> 44% of green gases emissions in Colombia come from energy related activates that comprise the burning of fossil fuels in manufacturing, transportation, oil&gas industries.(9)
Gender & Marginalisation
> 86.3% of households led by rural women have access to electricity whereas 96.3% of households have access at a national level (3).
Expected Development Outcome
> Diversify energy matrix to 12-20% non-conventional renewable sources by 2050.
> Improve the quality of the environment by reducing polluting emissions.
> Guarantee sufficient transmission capacity for energy generation to connect to the national grid and efficiently reach consumers and markets. > Enhance energy efficiency and reduce excess carbon emissions by ensuring reliability of supply.
Gender & Marginalisation
> Reduce gender gaps in access to public services including electricity, preventing poverty traps.
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
7.b.1 Installed renewable energy-generating capacity in developing countries (in watts per capita)
7.1.1 Proportion of population with access to electricity
Current level (2018): non conventional renewable share: 1% (2).
Current levels (2019): per capita installed capacity of non conventional renewables is 3.9 (2).
Current level (2018): electricity coverage in Colombia is around 96% (10).
Target level (2030): 7-12% non conventional renewables target in 2050 (2).
Target level (2030): 7.7 watts per capita installed capacity of non conventional renewables ex-pected by 2030, based on National Energy Plan forecasts and DANE population forecasts (2).
Target level (2030): The target coverage by 2030 in Colombia is 100% (10).
Secondary SDGs addressed
Directly impacted stakeholders
People
Public sector
People
Indirectly impacted stakeholders
People
Corporates
Planet
Outcome Risks
>The high investment required to provide renewable energy creates an opportunity cost of investment that could be used to getting with traditional sources of energy to vulnerable populations faster, therefore focusing on non-conventional renewables can delay achieving coverage.
>Increased prices of energy at peak demand times due to the high cost of renewable energy in the short term.
Impact Risks
External risk: > Drastic changes in the environment that are not accounted for such as earthquakes, weather changes, and other natural disasters affecting ability to source energy. >Disputes among local population can hinder the construction of infrastructure.
External risks: >lack of complementary infrastructure could limit the ability of vulnerable population to profit from the developments.
Impact Classification
What
Positive and significant outcome due to improved basic services coverage and sustainability.
Risk
Failing to diversify the energy matrix could lead to energy shortages, lack of access and environmental health problems.
Impact Thesis
This initiative intends to reduce the inequality in the access to energy and diversify the energy matrix towards renewable sources.
Enabling Environment
Policy Environment
(National Energy Plan 2020-2025): sets the target of diversification of Colombia's energy matrix to be 12-20% non-conventional renewable sourced by 2050 (designed by UPME) (2).
(Plan Nacional de Desarrollo): Pact for the quality and efficiency of public services - Implement alternative solutions for access to electricity in most remote areas for at least 100 new homes leveraged by the National Rural Electrification Plan (PNER), which defines prioritization criteria and plans electrification investments in rural populations with higher unsatisfied basic needs.(11)
(Estrategia Colombiana de Desarrollo Bajo en Carbono): Decouple the growth of GHG emissions from economic growth by promoting the alternative sector development.(12)
Financial Environment
Fiscal incentives: Income tax: 50% deduction from total investments and .VAT excluded for equipment and machinery purchases; services for new and existing investments and measurement and evaluation of the acquisition of potential resources.(4)
Financial incentives: Bancoldex and the Ministry of Commerce, Industry and Tourism, launched $ 100 billion pesos credit line to promote investment projects in sustainable development and energy efficiency.(4)
Financial incentives: FAER (a fund created by the Ministry of Energy) allows Territorial Entities, to manage investment plans, programs and projects prioritized for the construction and installation of electrical infrastructure and coverage expansion (4).
Regulatory Environment
(Law 1715 of 2014): regulates the integration of URES into the national electricity system encouraging investment, R&D in the sector, by: (1) Authorizing auto-generators to sell their surpluses to the distribution network and the development of projects based on URES is promoted.(13)
(Law 629 of 2000): this law approved joining the international Kyoto Protocol with the purpose of committing to greenhouse gases emission reduction (14).
(Creg resolution 098 of 2019): first regulation on renewable energy storage through batteries (15).
Marketplace Participants
Private Sector
Colombian Association of Renewable Energies (ACER): Promotes the development of renewable energies and supports research, innovation and technological application.(2) Non-Conventional Energy and Efficient Energy Management Fund (FENOGE): Finances renewable energy small-scale self-generation projects in non-interconnected zones.(3)
Government
UPME, Ministry of Energy and National Government working towards a common goal, carrying out renewable auctions and providing investment incentives.
Non-Profit
Ferdescol and Asorenovables are non profit foundations promoting the importance of the use of renewable energy in the country.
Multilaterals
Multilateral organizations such as BID Invest are financing renewable energy projects for over USD 1bn at La Guajira through Bancoldex (15).
Target Locations
References
- (1)IDEAM (2012) – Inventario de efecto invernadero. Accessed May 22nd 2020
- (2) UPME (2019) -Plan Energético Nacional
- (3) DANE (2018) Mujeres Rurales en Colombia
- (4) Colombia Investment Summit (2020) - Energy. Accessed February 8th 2021.
- (5) R. Misle y L. Lasso (2012) “Evaluacion Tecnica, Economica e Institucional de la Gestion de Residuos de Construccion y Demolicion en la Ciudad de Bogota”, Pontificia Universidad Javeriana, Bogotá. Accessed May 14
- (6) Castaño, J. O., Misle Rodríguez, R., Lasso, L. A., Gómez Cabrera, A., & Ocampo, M. S. (2013). Gestión de residuos de construcción y demolición (RCD) en Bogotá: perspectivas y limitantes (link)
- (7) WWF (2018) – Petición por las energías renovables. Acceso 2 de Mayo 2020
- (8) Hirmer (2017) – The benefits of energy appliances in the off-grid energy sector based on seven off-grid initiatives. Accessed May 15 2020
- (9) Superservicios (2018) – Diagnóstico de la prestación del servicio de energía eléctrica. Acceso 4 de Mayo (link)
- (11) DNP (2017) – Plan Nacional de Desarrollo
- (12) MinAmbiente (2011) – Estrategia Colombiana de Desarrrollo Bajo en Carbono. Accessed June 3rd 2020
- (13) ICEX (2019) – Energías Renovables en Colombia (link)
- (14) Cámara de comercio de Cali (2016)- Normatividad para las Energías Renovables en Colombia. Accessed February 8th 2021.
- (15) Energía estratégica (2019) -El Gobierno de Colombia expide su primera regulación para la acumulación de renovables mediante baterías. Accessed February 8th 2021
- (16) UPME (2016) – Plan Indicativo de Expansión de Cobertura de Energía
- (17) Valora Analitik (2021) Colombia llegaría a 734 mw de capacidad instalada de energías renovables en 2021. Accessed February 8th 2021.