EDF Renewables Abandons Solar Energy Project in Colombia Following Regulatory Complications

Citing changes in the conditions established by the government and delays in granting licenses and permits, French multinational EDF Renewals announced on October 5 its withdrawal from a large solar energy project (Pubenza PSR 2) in the Colombian department of Cundinamarca.

In a public statement, the company stated that the reasons for this determination were “significant delays in granting the environmental permits and licenses by local entities.” The document added that the decision is also the “consequence of regulatory and fiscal changes that have occurred since the auction took place. Among them, the tax reform that impacted the profitability of the projects and the benefits of Law 1715, to promote renewable energies. Likewise, the macroeconomic context with increases in interest rates and the volatility of the exchange rate have made the process even more difficult.”

In addition to all these circumstances, Elodie San-Galli, president of EDF Renewables Colombia, said to the radio station Caracol Radio, that on September 29, the national government, through XM, the operator of the interconnected system and the administrator of the Colombian wholesale energy market, imposed a compliance clause (a fine) for about $1 million USD.

The executive claimed, in another interview with W Radio, that how could this happen if they have requested several times a meeting with President Gustavo Petro and Omar Andrés Camacho, minister of mines and energy, but they were not available to meet.

In the release, EDF Renewables claimed that on September 8 the Council of State, the highest judge of public administration in the Andean country, annulled the regulatory framework of the 2021 energy auction due to it being ruled unconstitutional. For this reason, as indicated in the corporate text, the Colombian government should not have executed the guarantees for the initiation of the project.

The international organization maintained that it was not its fault. “The greatest responsibility for the project not entering into operation is the non-granting of permits and licenses by the regional corporation [Autonomous Regional Corporation of Cundinamarca], which failed to comply with the deadlines established in Decree 1076 of 2015.”

The French company expected the licenses and permits by December 2021, but they were only granted in June of this year. 

EDF Renewables concludes the text with a diagnosis about Colombia’s energy future. It asserted that obstacles like these are what have caused “no wind or solar project in Colombia is currently in operation. This is not only a competitive disadvantage for the country compared to other nations in the region, but also presents a panorama of uncertainty in the face of the El Niño Phenomenon that is being experienced [throughout Colombia].”

The Colombian Government’s Response

Following the publication of the EDF Renewables statement, President Gustavo Petro, in typical fashion, replied on his Twitter account. “What did not allow access to the French company in the required times was because the autonomous corporation, which is not part of the government, did not issue licenses opportunely and was heavily fined by the XN.”

In turn, the National Environmental License Agency (ANLA) posted on its Twitter account that “following an announcement by the company @EDF_Renewables, we inform that the project subject to environmental licensing in Girardot Cundinamarca was not the responsibility of ANLA, but of CAR. The ANLA responds to requests with opportunity and transparency.”

Regarding the matter of delays in the granting of licenses and permits, Minister of the Environment Susana Muhamad defended, on September 28 and 29 in the Caribbean city of Cartagena during the National Mining Congress, that ANLA “complies with the stages of the procedure. In the ANLA, everything is systematized and digitalized and is publicly known on the ANLA website.” 

However, the minister anticipated that to improve these processes, she will present a bill to the Colombian congress that will help speed up the procedures. According to Muhamad, in the face of the energy transition that the current administration is committed to, “strengthening environmental standards is an economic priority for the country, although we simply cannot accelerate the procedures while harming environmental standards.”

The Ambitious Solar Project that Was Not

The planned Pubenza PSR 2 Solar Generation Plant project was going to have a capacity of 50 MW, according to Energiaestrategica.com. Respecting EDF Renewables, this French firm awarded 254,899.6 kWh/day of energy in the auction they won in 2021. It did so at the most competitive price of all the selected offers: $118.7 COP ($0.028 USD) per kWh. 

The foreign company, along with this now rejected project, also kept 429,999.7 kWh/day of energy that would come from Bosques Solares de los Llanos 6 (in Colombia’s eastern), of 79.6 MW, where it offered the same price: $118.7 COP ($0.028 USD) per kWh.

Since its proposal became known, the renewable energy project aroused a lot of interest among state authorities. The deputy Minister of Energy, Miguel Lotero Robledo, during a presentation before the House of Representatives on December 13, 2021, explained that Pubenza PSR 2 was going to “allow for an increase in installed capacity in generation for the region, much greater reliability and energy security for users, of course, and it will encourage the increase of renewable energy in the region.”

At that moment, the state official estimated that the project would be operational in January 2023.

(Photo credit: ANLA)