Petro’s Transition to Renewables Stalls as Colombia Faces Looming Energy Deficit

Difficulties in obtaining environmental permits, political uncertainty and protests from local communities are halting investment and construction

Petro’s Transition to Renewables Stalls as Colombia Faces Looming Energy Deficit
December 12, 2023 | 10:00 PM

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Bogota — Gustavo Petro’s bid to decarbonize the Colombian economy through the development of new and clean energy sources is encountering formidable resistance in local communities, potentially steering the country toward an energy deficit by 2026.

Indigenous communities or residents near such renewable energy project sites have been the primary obstacle blocking private companies from executing investment plans and getting started with construction works.

Enel, for example, has faced challenges to get the ball rolling for its Windpeshi wind farm project, as Guajira communities have impeded access to the site on over 50% of workdays, which has ultimatedly led to the project’s suspension. Similarly, EDF Renewables Colombia has withdrawn from its solar energy project in Girardot (Cundinamarca) due to delays in environmental permits and changes in fiscal and sector rules.

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EPM’s plan to hand over the Jepírachi wind park to the Wayúu community in La Guajira has also fallen through, meaning that that project has been abandoned.


Representatives from the renewable energy industry in Colombia emphasized to Bloomberg Línea the urgent need for government measures to help untangle projects over the lack of environmental permits and local community issues.

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The Impact of El Niño and Future Role of Renewables

Alexandra Hernández, director of SER Colombia, highlighted, “The current El Niño phenomenon affected the reliability charge from 5 to 6 years ago, when the majority of renewables weren’t even on the radar.” Looking ahead, she noted that renewable energies could still play a crucial role from 2026 onward to address a potential structural deficit in energy supply.

Despite the urgency for delayed projects to make progress, the relations between the private sector and communities have not been easy, hindering such prospects.


Alejandro Castañeda, director of ANDEG, emphasized that “today’s problem is the social conflict with communities, issues related to prior consultations, blockades, etc. That’s what is generating many more complications in the development of renewable energies in the country.”

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Moreover, stakeholders in the country’s energy industry believe it is necessary to be mindful of the government’s messages in its eagerness to reform the energy market.

Natalia Gutiérrez, president of ACOLGEN, criticized a phrase that President Petro has repeated on several occasions: “Messages like ‘full reservoirs and high prices’ cannot gain traction; they can’t say that there is waste if the price is above CLP$1,000.”

Sectoral Needs and Regulatory Challenges

Although the relationship with communities is the most challenging aspect for the Colombian energy industry, there are regulatory aspects that could help unlock processes holding the industry back.


On the regulatory side, what would help is greater flexibility in the formation of market prices and adjustments that are not groundbreaking. What’s blocking investor decisions is social instability,” said Castañeda from ANDEG.

Additionally, there is a demand for mechanisms that allow for speeding up several administrative procedures that are currently impeding the progress of the projects.

From a regulatory standpoint, what is needed is to simplify procedures and have clearer rules regarding process timelines. This is key because it will result in shorter lead times for project commencement and greater certainty about when they will begin,” cautioned the director of SER Colombia.


Regarding progress in this regulation, Alexandra Hernández from SER assured, “We have suggested to President Petro and the Ministry of Mines an emergency plan so that UPME can unlock all the procedures under its jurisdiction, and so that CAR can also move forward in issuing all environmental licenses and permits.”

Addressing Delays and Inherited Challenges

Although projects fail to meet anticipated timelines today due to a lack of permits and administrative procedures, industry participants acknowledge that it has not been due to negligence by this government but rather a problem inherited from several previous administrations.

Gutiérrez, president of ACOLGEN, argues that “what is needed is more energy because more energy solves many of the situations we face: price and balance situations. However, there is also a significant challenge because we have a lot of delayed energy, and this is not a problem of this government; it has come from previous governments.”

A first step in addressing these issues, says Castañeda from ANDEG, is to have an operational CREG (Energy and Gas Regulatory Commission), “the dialogue with the government was halted for many months because we did not have CREG. We are waiting for the appointed experts to resume the dynamics we had before. The mechanisms exist; we are in the midst of a reliability charge auction that is open, and we hope to reach February with this charge auction that generates mechanisms for companies to make decisions to continue investing in electricity generation.”


Another key takeaway, according to Hernández from SER Colombia, is to progress in “the stages of the commercialization process and reviewing the economic and tax equation, allowing projects to flow and close financially in light of the new macroeconomic reality (exchange rates and interest rates). Particularly, mechanisms in commercialization that can support the financial closure of projects and contract that energy are crucial for starting the construction of these projects.”

Anticipating Energy Deficit and Short-Term Perspectives

Although the energy deficit is projected to start having effects in 2026, Natalia Gutiérrez warns that “that is not long-term; for us, 2025 and 2026 are short-term.”

The president of ACOLGEN states that “we need stability, and by that, I mean many things. A functional institutionality—there is now CREG, and finally, the government understood the importance of CREG. We hope that the regulatory agenda will unfold. Unfortunately, the price situation is holding the sector’s agenda hostage, and there is much to be done, including regulating intraday markets, modernizing the market, and a lot of initiatives that will generate efficiencies and accelerate this path of energy transition.”