Global renewable energy operator Renovatio Group has had a presence in Colombia since 2013, trading and marketing green energy and related services to environmentally conscious business customers. Now, it is launching the first private renewable energy auction November 4, 10am, in Colombia, seeking to provide an innovative solution to structural obstacles to green energy project finance in Colombia.
The auction offers to buy up to 20 GWh per month of green energy for terms up to 25 years. This overcomes an obstacle that prohibits all but the largest industrial users from negotiating long term energy contracts. In Colombia, users below 50 MWh per month of electricity fall into the regulated energy market which as a consumer protection, does not allow long term contracts. In turn the lack of long term PPAs (Power Purchase Agreements) makes financing of such energy projects more difficult and uncertain. Compounding the challenge, even those energy purchasers who can enter into contracts in Colombia customarily only do so for a maximum of three to five years.
The Renovatio Group has been a pioneer in the development of wind projects in La Guajira, Colombia.
By acting as an intermediary, Renovatio, in collaboration with Banco Itaú, can offer long term contracts to green energy generators, and then remarket that energy to small and medium sized electricity consumers in Colombia. This benefits green energy consumers, but it also benefits project developers and generators, as they can obtain certainty regarding pricing, and can present a stable, long term creditworthy customer in Renovatio, making financing easier and less expensive.
Renovatio expects between 12-14 solar energy producers to participate. Projects don’t have to be complete to participate, but once commitments are made with regards to when the project will come online and produce electricity, producers will be held firmly to those commitments.
Any nonconventional renewable energy project as defined by Colombia’s Ministry of Mines and Energy according to law 1715 can participate. This includes wind solar, biomass, and small (less than 20MW) hydroelectric projects.
“Our auction, in addition to being the first private auction in the country, is totally innovative. We are giving projects as much flexibility as possible to present their offers however they want. For example, we are not setting the term of the contract, it is the project that decides what term it wants to offer us, up to 25 years. In the same way, it is the project that indicates its date of entry into operation, as long as it is before 2025, but we are going to be extremely strict that the project enters into operation on the date that it indicates,” said Renovatio Colombia’s general manager Francisco Sanclemente, CFA.
“We offer energy rates at very competitive prices to our clients that are reflected in real savings. Our vision for the future is to continue offering significant savings in rates and renewable sources. Many of our clients are committed to sustainability and the environment.”