General
On January 4, UPME published the terms and conditions of the long-term electricity supply bidding process. Interested parties may submit comments to the bidding terms and conditions until January 18 and submit the documentation for pre-qualification on January 28. The process seeks to contract 1.183 GWh annually, under the modality of average energy, through contracts valid for 12 years and must start delivery of energy on 1 December 2012. The fact is of vital importance since it marks an important milestone in the sector, with the creation of a mechanism of expansion different from the charge of reliability. The latter has proven to be costly to end users, as it requires a series of payments without the energy bill. Although its function is to guarantee that the necessary energy is available at all times, it has been used as a mechanism to expand the generating park.
Potential bidders
Only generation projects registered with the UPME at least in phase 2, i.e., in the feasibility process: environmental license and connection to the SIN, may participate. According to the report of January 11, 2019, the major projects to 10MW that will be able to participate are 104 projects: 25 Thermal, 45 solars, 20 hydro, 13 wind, and 1 with biomass. In addition, projects in operation with the date of start after December 31, 2017, may be involved. The total available capacity would be 11,3GW of which only 0.4 GW is at the stage of development.
3. As opposed to the 135 MW or 270 MW required to supply the aforementioned amount of energy according to the plant’s hours of availability. At this point, we see that the Ministry of Mines was either short or very conservative. In the next few days the CREG must publish the definitive resolutions of: transfer to Formula Tariff, conditions of competition of the scheme. The auction is two-pronged, i.e. requires voluntary participation of the demand (marketers to the final customer) and supply (generators). And in this regard, we are concerned that there are no incentives for demand to participate in this auction. The qualification criteria include: 1. Resilience, understood as diversity 2. Complementarity of resources in front of the Cauca-Magdalena basin, 3. Regional energy security 4. emissions reduction.
Expected difficulties
In our opinion, the main difficulty of these specifications lies in the guarantees required, which are neither few nor inexpensive and transfer to the developer a very high risk that he cannot manage. Therefore, the main limitation for multiple bidders will be presented at this auction. We therefore consider it urgent that a code of ethics be implemented for the sector, as is the case in the world’s big markets. So that those entities that develop dubious or anti-ethical practices, are strongly punished in the suspension or elimination of the license, the company and its shareholders. Finally, we feel the absence of the cost-reduction mechanisms that the reduction of carbon credits should offer. That for auctions in other countries, was the key factor for obtaining very low prices. Also, we miss the incentive to the national industry as a qualification factor of the different offers.
In Efinetico, we can accompany the process of participation of your company in this auction. [button title=”Contact us” link=”https://efinetico.agilecrm.com/forms/5725851488354304″ new_tab=”no”]
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