The Economics of Renewable Energy Auctions

Colombia’s Clean Energy Future

Colombia’s auctions facilitate competitive renewable energy price setting, lower costs, expand access to affordable and sustainable energy, and increase transparency of energy procurement.

An auction is a competitive process for policymakers to procure electricity generated by renewable energy. This competitive, transparent process helped the Government of Colombia meet the country’s energy and climate goals and attract investment in its clean energy future.

USAID helped Colombia prepare for, design, and implement auctions that achieved historically low prices for renewable energy, securing over 2,170.3 megawatts of new wind and solar power at prices 15 to 25 percent lower than previous contracts. These renewable projects will attract approximately $2 billion in private investment, save up to $228 million in annual electricity costs, and are expected to create 4,700 jobs and new business opportunities in a region hit hard by climate change. The competitiveness of Colombia’s auctions increased from 2019 to 2021 with several new companies placing bids. Competition drove energy prices down while attracting new and diverse investors in Colombia’s energy market.

The share of energy Colombia produces from solar and wind will increase from less than one percent in 2019 to about 30 percent by 2030, making the power grid more resilient and reducing costs for consumers.

NOV 2021, VIDEO - USAID provides a full range of services to prepare for, design, and implement renewable enrgy auctions while making sure that partners are support in every step of the process.

Explore the Toolkit

Colombia's Auctions

USAID Support for Renewable Energy Auctions in Colombia

Image
A photo of windmills and solar panels in a field at sunset

Body
As a result of auctions, Colombia’s share of energy from solar and wind is expected to increase the country’s energy resilience and cultivate low-carbon development.

Renewable Energy Auctions in Colombia

Image
Renewable Energy Auctions in Colombia: Context, design, and results

Body

This case study examines the context, design, and results of auctions in Colombia that diversified the country’s energy mix by bringing in private investment.

Accelerating Colombia's Renewable Energy Future through Private Sector Engagement

Image
A female engineer surveys a wind farm.

Body

After awarding nine power purchase agreements, Colombia incorporates a private sector engagement strategy to ensure renewable energy projects are completed.

Auction Documents

Long-Term Energy Auction No. EEC 02-2019

Colombia’s National Mining and Energy Planning Unit (UPME) provides information regarding its second energy auction on its website (in Spanish, with English translation by Google)

Colombia Energy Auction No. 02-2019 Bidding Rules (Unofficial Translation)

Colombia’s Ministry of Mines and Energy (MME) plans to hold the country’s second variable renewable energy (VRE) auction in October 2019. Under USAID’s technical assistance to Colombia, this unofficial English translation of the auction’s bidding rules is provided as a general reference.

Colombia Energy Auction No. 02-2019 Long-Term Power Purchase Agreement (Unofficial Translation)

Colombia’s Ministry of Mines and Energy (MME) plans to hold the country’s second variable renewable energy (VRE) auction in October 2019. Under USAID’s technical assistance to Colombia, this unofficial English translation of the long-term power purchase agreement is provided as a general reference.

Snapshot of Colombia’s First Long-Term Energy Auction

Colombia’s Ministry of Mines and Energy (MME) held the country’s first variable renewable energy auction on February 26, 2019. However, due to antitrust requirements set to ensure sufficient competition, the auction resulted in no awards. USAID recommended changes and MME revised the auction rules for a second auction with awards to be announced in late October 2019.

Colombia Energy Auction No. 01-2019 Bidding Rules (Unofficial Translation)

Colombia’s Ministry of Mines and Energy (MME) plans to hold the country’s first variable renewable energy (VRE) auction in 2019. Under USAID’s technical assistance to Colombia, this unofficial English translation of the auction’s bidding rules is provided as a general reference.

For More Information

Colombia’s Clean Energy Future

USAID is helping Colombia diversify its energy mix with renewable energy while making its grid more resilient to climate change, lowering electricity costs, creating local jobs, and promoting gender equality in the energy sector.

Colombia

Colombia is a middle-income country and one of the oldest democracies in Latin America. However, it has endured nearly half a century of intense armed conflict, perpetuated by widespread illegal drug production and trafficking.

Scaling Up Renewable Energy (SURE)

GLOBAL, 2017–ONGOING – Through the SURE program, USAID helps partner countries power economies, meet international climate commitments, and strengthen energy security via private investment in, and competitive procurement of, clean electricity.