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Colombia: Focus on energy diversification and grid decentralisation [free access]

February 14, 2020

Colombia is currently working towards a gradual transition to sustainable energy generation and consumption and is focusing on transformational policies and strategies. A key focus area under this is the decentralisation and digitisation of the energy network. To support this, the government is working on redefining energy systems, increasing the participation of new renewable sources and energy efficiency systems, and incorporating new technologies.

 

In line, Colombia’s mining and energy planning unit, Unidad de Planeación Minero Energética (UPME), published the Plan Energético Nacional 2050 or National Energy Plan 2050 in December 2019. The Plan is a fundamental tool to achieve the energy transformation of the country, and takes into account international commitments such as Sustainable Development Goals (SDGs), Conference of the Parties 21 (COP 21) (2015) and COP 25 (2019) in addition to the good practices of the Organisation for Economic Co-operation and Development (OECD). It promotes electric vehicles (EVs), energy efficiency, smart grids, renewable energy generation, new technologies, and energy integration collaboration with other countries. The plan is under consultation till February 2020.

 

As part of its energy transformation strategy, UPME is also looking to decentralise the country’s power network. It recently issued its Plan Indicativo de Expansión de Cobertura de Energía Eléctrica (PIEC) 2019-23, or Indicative Plan for Expansion of Electric Power Coverage 2019-23, with an aim to provide universal access to electricity in the country. It is noteworthy that the plan does not mention any large-scale project for the study period 2019-23, but focuses on either expansion or upgrade of the medium or low voltage networks, or setting up of off-grid systems.

 

Under the PIEC 2019-23, UPME has identified four ways to achieve full electrification of the country—densification, intensification of Sistemas de Distribución Local (SDL) networks, micro-networks and individual isolated solutions. The PIEC 2019-23 indicates that an investment of COP7.41 trillion will be required to achieve 100 per cent electrification in the country. Of this amount, 48 per cent will be invested in setting up isolated solutions with hybrid micro-networks, 43 per cent in individual isolated solutions, and 9 per cent in the expansion of SDL. This plan was also under consultation till January 31, 2020.

 

Historical evolution of energy supply and demand

Colombia’s energy mix has been dominated by fossil fuel (coal and oil), with a share of 77 per cent. The remaining 23 per cent comes from hydroelectricity, natural gas and non-conventional sources of renewable energy (bagasse, biofuels and firewood).

 

During the past four decades, significant changes have been observed not only in final energy use but also in the composition of the country’s energy mix. Between 1975 and 2018, energy consumption has increased by 78 per cent from 735 petajoules (PJ) to 1,308 PJ, equivalent to an annual average growth rate of 1.81 per cent. This growth is mainly due to the increase in energy consumption in the manufacturing industry and the transport sector, with annual average growth rates of 2.4 per cent and 5.9 per cent respectively. The increase in these sectors contrasts with the decrease in energy consumption in the residential sector, which was the most energy-intensive sector in 1975 with a 46 per cent share in total energy demand. The reduction was mainly due to the replacement of wood consumption by gas fuel (63 per cent reduction in the analysis period).

 

Figure 1: Sector-wise change in final energy consumption share during 1975-2018(%)

  

Source: UPME

 

From the supply side, substantial changes in Colombia’s energy matrix were also witnessed in the last four decades, essentially driven by energy policies adopted at the national level. For example, the percentage share of diesel in the energy matrix has increased more than fivefold, as a result of the increase in its demand in the transport sector and the adoption of a policy of differential prices of diesel at the beginning of 2000. Also noteworthy is the increase in the share of natural gas in the energy mix, which grew more than eightfold to reach a share of 16 per cent, mainly due to the implementation of the gas consumption massification programme adopted at the beginning of the 1990s. There was also a notable decrease in the share of fuel oil in the energy matrix during the period, mainly as an offset of the gas consumption massification programme.

During this period, the share of electricity in the energy matrix has increased by more than three times, mainly due to the increase in the electric power coverage index, which has grown by more than 20 per cent in the last 20 years.

 

Current energy scenario

As per UPME, energy consumption of the country in 2018 was 1,308 PJ. The transport sector had the highest share at 40 per cent (524 PJ); the industrial sector was at 22 per cent (293PJ); the residential sector was at 20 per cent (263 PJ); the commercial and public sector was at 6 per cent (71 PJ); and other sectors had a 12 per cent share (157 PJ).

 

Table 1: Sector-wise energy basket in 2018

Residential

Commercial and public

Tertiary

Transport

Industry

Electricity (33.79%)

Electricity (67.28%)

Bagasse (27.11%)

Gasoline mixture (45.45%)

Natural gas (34.18%)

Natural gas (19.03%)

Natural gas (24.71%)

Electricity (21.06%)

Diesel mixture (40.09%)

Coal (29.13%)

Firewood (39.55%)

LPG (8.01%)

Natural gas (10.80%)

Natural gas (3.71%)

Bagasse (14.11%)

LPG (6.54%)

 

Fuel oil (4.26%)

Jet (10.39%)

Electricity (19.02%)

Coal mineral (1.03%)

 

Mixture diesel (35.61%)

Electricity (0.07%)

LPG (1.35%)

Kerosene (0.06%)

 

LPG and others (1.16%)

Fuel oil (0.30%)

Others (2.21%)

Note: LPG – liquefied petroleum gas

Source: UPME

 

The table highlights the predominance of fossil fuels in the transport and industry sectors, a disproportionate use of firewood in the residential sector, and the predominance of electricity in the residential, commercial and public, tertiary and industry sectors.

 

Shift towards non-conventional sources of energy

Currently, about 70 per cent of the electricity is being produced by hydro projects, thus making the power mix of the country vulnerable to climate variability. To address this issue, the country is now focusing on setting up wind and solar power generation projects.

 

The Colombian government plans to have 2.2 GW of installed renewable energy capacity by 2022, up from the current capacity of 50 MW. To this end, it hosted its first renewable energy auction in October 2019 and awarded eight projects with a cumulative capacity of 1,298 MW. Of these, five projects are solar energy-based and three are wind energy-based.

 

The auction closed with a weighted average allocation price of COP95.65 kWh, about 50 pesos below the current average cost of generation in bilateral contracts. In the development of the adjudication process, the Energy and Gas Regulation Commission had established a maximum limit individual price of COP200 per kWh and as a maximum average limit the price of COP160 per kWh.  

 

National Energy Plan 2050

The main purpose of the plan is to define a sustainable energy model that promotes energy transformation to achieve economic progress, improve quality of life, and promote respect for the environment.

 

The key objectives of the plan are:

 

 

Key recommendations of the plan are:

 

 

Figure 2: Projections of energy demand by sectors by 2050 (PJ) 

  

Note: The figure shows demand projections estimated under three scenarios, namely, COP 21 Baseline Scenario (Escenario Línea Base COP 21), Scenario 266 (Escenario 266), and New Market Scenario (Escenario Nuevas Apuestas), for five sectors – Transport (Transporte), Industrial (Industria), Residential (Residencial), Agriculture and Construction (Agricultura, Construccion Mineria), and Commercial (Comercial).

Source: UPME

 

Figure 3: Projections of demand for energy by fuel by 2050 (PJ)

Note: The figure shows demand projections estimated under three scenarios, namely, COP 21 Baseline Scenario (Escenario Línea Base COP 21), Scenario 266 (Escenario 266), and New Market Scenario (Escenario Nuevas Apuestas), for 10 sources of energy – Diesel Mix (Mezcia Diesel), Gasoline Mix (Mezcia Gasolina), Natural Gas (Gas Natural), Electricity (Eletricidad), Firewood (Leña), Coal (Carbón Mineral), Kerosene (Querosen), Bagasse (Bargazo), LPG (GLP), and Others (Otros).

Source: UPME

 

PIEC 2019-23

The key objective of the plan is to move towards universal electrification in the country while supporting the energy transition initiative of the government. To achieve this, the plan analysed the following alternatives: Sistema Interconectado Nacional (SIN) interconnection, isolated generation with individual solar photovoltaic (PV) solution, and isolated hybrid solutions for microgrids. Based on these, the following solutions have been proposed, namely, densification, intensification of SDL networks, micro networks, and single isolated solutions.

 

Densification of existing SDL networks

Under densification, UPME aims to connect users located in an area that can be serviced from the already installed medium voltage (MV) network, without significant addition of infrastructure at that voltage level. To implement this process, it is necessary to install MV to low voltage (LV) transformers, extend the LV network and build connections to provide the service.

 

Intensification of existing SDL networks

Under intensification of the existing SDL network, small extensions of MV lines will connect housing clusters located at distances of 1.5 km from the existing network.

 

Setting up micro-networks or individual isolated solutions

In the case of micro-networks, service is provided through a LV network with alternating current (AC), and the generation system should have sufficient capacity to meet the demand from workshops, stores, schools, health posts and other businesses and/or institutions that may exist in the communities. In addition, individual isolated solutions can be installed for populations that are not grouped with others. Taking into account the sites that do not intersect with the buffers on the existing network or the SUI transformer, and with less than 25 homes without service, it was assumed that they are populations capable of providing an individual PV solar solution.

 

Based on these solutions, several projects have been identified at the municipal level, details of which have been given in Table 2.

 

Conclusion

Given the current global trend of adopting energy transitional strategies and policies, Colombia’s move in the same direction will help the country meet its rising power demand [which is expected to increase at a compound annual growth rate (CAGR) of 2.61 per cent during 2020-33] in a sustainable way. The final versions of the Plan Energético Nacional 2050 and PIEC 2019-23 will further provide clarity on the government’s intentions and future moves towards achieving energy transition.

 

Figure 4: Identified SDL network densification and intensification solutions under PIEC 2019-23

Source: UPME

 

Figure 5: Identified microgrid and isolated network solutions under PIEC 2019-23

Source: UPME

 

Figure 6: Investment requirement at municipal level to achieve universal electrification under PIEC 2019-23 (in COP)

Source: UPME

 

Table 2: Proposed investment under PIEC 2019-2023 at the departmental level (COP million)

Department

Interconnection solutions

Isolated microgrids

Individual solutions

Total investment

Amazonas

-

53,709

30,549

84,258

Antioquia

101,182

28,291

58,965

188,439

Arauca

11,647

9,164

39,708

60,520

Archipiélago de San Andrés y Providencia

-

109

229

338

Atlántico

17,992

1,338

15,303

34,632

Bogotá, D.C.

771

-

-

771

Bolívar

32,644

114,716

198,428

345,789

Boyacá

37,065

24,851

85,379

147,295

Caldas

1,196

-

4,389

5,585

Caquetá

12,901

143,052

135,002

290,955

Casanare

6,139

38,842

86,477

131,458

Cauca

69,756

188,835

42,094

300,685

Cesar

18,069

125,869

105,635

249,573

Chocó

4,974

447,228

121,205

573,407

Córdoba

19,496

60,109

133,112

212,717

Cundinamarca

20,665

1,784

88,160

110,610

Guainía

-

45,578

29,462

75,040

Guaviare

728

60,257

58,599

119,584

Huila

514

58,911

190,746

250,171

La Guajira

19,977

938,795

590,302

1,549,074

Magdalena

21,388

91,719

155,094

268,201

Meta

25,700

54,046

262,198

341,944

Nariño

24,993

445,427

153,529

623,949

Norte de Santander

58,998

23,609

100,107

182,713

Putumayo

7,455

205,277

188,257

400,989

Quindio

879

-

1,260

2,138

Risaralda

418

-

1,069

1,487

Santander

41,149

740

5,706

47,595

Sucre

19,246

3,261

44,803

67,310

Tolima

45,592

638

93,645

139,876

Valle del Cauca

36,472

207,247

74,153

317,872

Vaupés

-

59,784

14,177

73,962

Vichada

-

111,454

100,998

212,452

 

658,006

3,544,642

3,208,740

7,411,388

Source: UPME