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Colombia to unveil clean energy auction, hydrogen roadmap details in Q1

21 January 2021 Keiron Greenhalgh

The government of Colombia expects the first quarter of 2021 to see a significant ramping up of the country's energy transition, with details of its latest renewable energy auction on the way before the end of March, as well the unveiling of a 30-year hydrogen roadmap, a senior official said 20 January.

Speaking at the Davos Energy Week 2021 conference, Minister of Mines and Energy Diego Mesa said the government's clean energy 2021 focus will include hydrogen, offshore wind and battery storage. The Marquez administration will also launch energy efficiency policies, he said.

Colombia wants to be Latin America's energy transition leader, raising renewable energy's share of the country's generation mix to 12% from about 1% currently, a target set during Mesa's time as deputy energy minister between 2018 and 2020. The country's target is 2.5 GW of operating renewable capacity by 2022.

Details of the 2021 renewable generation tender will be published within the "next two months," Mesa said during a webcast presentation.

In 2019, Colombia held what Mesa called the first "double-sided" auction for renewable capacity, offering standard 15-year power purchase agreements in an effort to attract investment and interest in the tender. The tender price was 35% below the existing level, which Mesa said was a surprise to oil and natural gas companies, which had expressed concern that prices would rise.

Mesa expects 2021's auction-the country's second-to be similar, although "obviously we have some refinements because we also had some lessons learned from 2019, but we're still in the process of developing" such changes.

By the end of Q1 2021, the government will also have laid out the plans for the first large-scale battery capacity auction in Latin America, Mesa said.

Hydrogen

Along that same timeline, the government will have issued the 30-year hydrogen roadmap.

Colombia is looking into both green and blue hydrogen development, Mesa said, which he believes will be "key for our transportation sector." Other countries in Latin America have expressed interest in importing hydrogen from Colombia, he said.

The country has agreed a green hydrogen research program deal with Chile. Columbia's neighbor to the south wants to produce the cheapest green hydrogen in the world by 2030 and to be among the world's three largest hydrogen exporters by 2040. Columbia is in the process of formalizing a deal with Germany and is working with the European nation on the roadmap. The government is also working on a hydrogen deal with the country's largest oil and gas company, Ecopetrol, he added.

Concurrently, the government is making modifications to Colombia's legal system to ensure it has incentives for investment in such technologies, noted the minister.

Colombia introduced tax and commercial discounts for electric vehicles (EV) in 2019, and, according to Rosa, had the highest EV sales in Latin America that year. He added that sales of EVs rose 83% year on year in 2020. The Marquez administration is developing a framework for the federal government as well as state and regional authorities to only use EVs from 2030 onwards, he added.

In a similar vein, in recent years, the government has been looking at minigrids and electrification, which would be especially beneficial to small, remote communities. Over the last 30 months, he said, some 45,000 customers have been connected to the electricity grid for the first time and by August 2022-when the current administration's time in office is set to end-a further 100,000 customers can expect to be connected.

Also in the coming months, Colombia will pull together its plans to tackle a commitment made by President Ivan Duque Marquez in December that the country would reach net-zero emissions by 2050. The administration is currently preparing its strategy for doing so, said Mesa. The country plans to reduce its greenhouse gas emissions by 51% by 2030, he added.

While cutting emissions is in sharp focus for the future, the government is not forgetting the existing extractive industry wealth it has been blessed with. Colombia is one of the world's top five steam coal exporters, with shipments expected to rise in 2021 after falling in 2020, according to IHS Markit data. One way to leverage that mineral wealth is employing carbon capture and storage technology, Mesa said.

Posted 21 January 2021 by Keiron Greenhalgh, Editor, Energy and Natural Resources Group, IHS Markit

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