Renewable energy auctions in Colombia: Context, design and results
Renewable energy auctions in Colombia were designed to complement the country’s electricity market mechanisms, which were insufficient to attract non-hydro renewable energy development on a large scale. They now provide Colombia with opportunities to diversify power supply and increase the resilience of the power sector, while also fostering investor confidence. The first auction, in February 2019, assigned bids between buyers and sellers, but did not award any contracts. Participation rates were promising, however, leading authorities to accelerate discussions on holding a second auction. Following modifications in the four categories of IRENA’s auction design framework – auction demand; qualification requirements and documentation; winner selection criteria; and risk allocation – in October 2019, the second auction successfully awarded contracts. This report by the International Renewable Energy Agency (IRENA) and the United States Agency for International Development (USAID) analyses the changes in design between the two auctions, as well as their price outcomes and the factors affecting those prices.