The Economics of Renewable Energy Auctions

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Graphic depiction of a stylized map of the America's, focused on Colombia
Colombia’s auctions facilitate competitive renewable energy price setting, lower costs, expand access to affordable and sustainable energy, and increase transparency of energy procurement.

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.

Scaling Up Renewable Energy through Auctions (00:57)

, VIDEO – USAID provides a full range of services to prepare for, design, and implement renewable energy auctions while making sure that partners are supported in every step of the process. Explore the auctions toolkit

Colombia’s Auctions

, FACT SHEET – 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.

, CASE STUDY – 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.

, CASE STUDY – 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

, UPME – 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).

, GUIDANCE – 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.

, GUIDANCE – 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.

, FACT SHEET – 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.

, GUIDANCE – 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

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USAID is helping Colombia diversify its energy mix with renewable energy while combating climate change, lowering electricity costs, creating local jobs, and promoting gender equality in the energy sector.
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2018–ONGOING, COLOMBIA – USAID is helping Colombia diversify its energy mix with renewable energy while combating climate change, lowering electricity costs, creating local jobs, and promoting gender equality in the energy sector.

USAID Colombia

USAID supports government and citizen efforts in Colombia to promote economic prosperity through the licit economy; improve the living conditions of victims of violence and vulnerable groups, including Afro-Colombians and indigenous peoples; promote respect for human rights and rule of law; and address climate change and environmental issues in one of the most ecologically diverse countries in the world.

Mother holding her son in nature. Wind turbines in the background.
Through the Scaling Up Renewable Energy program, USAID helps partner countries power economies with renewable energy, meet international climate commitments, and open markets to private investment and competition.
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2017–ONGOING, GLOBAL – USAID’s Scaling Up Renewable Energy (SURE) program helps partner countries meet bold climate commitments by accelerating their transition to more affordable, reliable, and accessible energy that spurs growth, powers health systems, and reduces emissions.

Through SURE, USAID provides a variety of services to help policymakers, utilities, and regulators plan, procure, and integrate renewable energy, modernize energy sectors, and create policies that enable sustainable energy markets to flourish. As more countries aim to achieve net-zero emissions by 2050 and reduce hazardous waste, SURE’s Innovation Fund supports clean energy technology, energy efficiency innovation, and a circular economy for renewable energy equipment.

Last updated: July 24, 2022

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