• Creimerman Product Team

Colombia is determined to lead the renewable energy industry, and most probably will

“If something is important enough, even if the odds are against you, you should still do it”. Elon Musk first said it and Colombia has embraced it. Or at least that could have been a great answer of its government when its clean energy goals were criticized for being too ambitious.

Colombia already ranks in the Energy Transition Index 2019 ranking of the World Economic Forum, as the third largest economy in South America in capacity to supply energy in an accessible and environmentally sustainable way.

But that is not enough for its President, Iván Duque Márquez, who is determined to “(…) reach 10% of generation from non-conventional renewable energies, to reach 20% in the next decade to finally become a carbon-neutral country in 2050 (…)"; and in that path he has announced the plan to:

  • Move from 50 megawatts of installed capacity to more than 2,200 megawatts by 2022 in unconventional renewable energy sources.

This represents investments of between US$1.5 billion and US$2.5 billion and a reduction of approximately three million tons of CO2, equivalent to planting 6 million trees!

  • Plant 180 million trees to combat deforestation.

  • Promote circular economy, sustainable production and trade.

But not it is not just goals and plans. It is a work in progress.

In just 27 months it has multiplied the installed renewable energy capacity in the country by 5, reopened a new solar plant, the development of 14 large-scale wind and solar projects is currently underway, and its COVID-19 economic recovery plan – Commitment for Colombia – has 25 of 32 projects dedicated to renewable energies.

I know what you are thinking though… how are these policies an investment opportunity?

And the answer is that per se, they are not. But that they come with a great amount of other policies that are.

For instance, this year the government has been issuing green bonds since 2017 and it’s going to continue to do so this year - US$ 575 million of these notes in monthly auctions in the second half of the year, to be accurate -, with which they will finance renewable energy generation plans, fleets of fuel-efficient vehicles and projects that help combat deforestation.

Moreover, there are already tons of regulations that are looking to attract direct foreign investment in the industry. From law 1715, that offers incentives such as additional deduction of income of up to 50% of the value of the investments in renewable or clean energies, applicable within a period of 15 years, the exclusion of VAT for the purchase of goods and services, exemption from payment of import duties on machinery and equipment, and the allowance of an accelerated depreciation of assets; to law 2069, that promotes the creation of new companies through 5 measures: differentiated fees and simplification – to ensure a reduction of tariffs and measures that facilitate the establishment and operation of companies; better access to the public procurement market; better conditions for entrepreneurs to access financial instruments; and an update of the regulatory framework around institutionality for entrepreneurship.

The next question is: do they really work?

They have allowed Colombia to be the home of 41 new investment projects for energy development from 19 different countries that invested US$ 5 billion in the last two years.

If that we add to that the characteristics of a renewable energy project, like a quick ROI and low maintenance costs, and the characteristics of Colombia, with regions with a wind speed that double the global average, the opportunity gets harder to ignore.

It seems like the country is managing to reach its goals… and who wouldn’t want to be a part of that?

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