A few days ago, the Energy and Gas Regulation Commission (Creg) announced that it is necessary to carry out a new auction to obtain the electricity required to meet the consumption of Colombians and avoid rationing in 2027-2028.
The Administrator of the Commercial Exchange System (Asic) has already announced the schedule with the obligations and deadlines to carry out this auction to display Firm Energy Obligations (OEF) of the Reliability Charge for the period between December 1, 2027 and November 30, 2028.
(Also read: The Creg warns that intervening prices can lead to rationing)
This firm energy is what generates the plants in Colombia even in critical hydrology conditions or system failures so that users do not have to face rationing.
On May 24, the generators must declare your interest in participating in the auctionwhile on July 17 they have to deliver the guarantee that protects their participation in the process (guarantee of seriousness of the offer).
The Asic will receive the offers to participate in the auction on August 16, 2023 and this same day the OEF adjudication process will take place. The results of the process will be announced the following day, on August 17.
Another key date to keep in mind is that on September 7th, participants must Delivery of fuel contracts or performance guaranteeswhile on October 12 the Asic will have to issue the certifications of the OEF proposal.
Developers or investors who wish to participate in the auction must present a certificate from Upme stating that the plant has concept of connection to the National Interconnected System (SIN).
For those generation plants or units with obligations that come into commercial operation before December 1, 2027, the Creg will establish as an incentive that they can begin to receive remuneration from the Reliability Charge, supporting since its entry into operationwithout modifying the end date of the energy obligations acquired in the auction.
How likely is power rationing?
According to the energy analysis carried out by the Creg, it indicates that the supply of firm energy for 2027 and 2028 could be less than what is required to meet the consumption expected for these years, in the event that Demand growth exceeds the most recent forecast of the Mining and Energy Planning Unit (Upme).
In a report published in October 2022, Upme highlights that between 2022 and 2036 electricity consumption could have an average annual growth of between 2.22 and 3.35 percent.
But there are also other risk situations that, if they materialize, could compromise the attention of the demand in the face of a possible critical power supply condition.
(Read also: Reliability Charge auction called to ensure energy supply)
For example, the energy offer could be less than that estimated due to the withdrawal or delay in the entry of plants into the system or due to a possible delay in the entry into operation of the four units of hydroituango which is expected soon.
However, there is also an important list of projects that have the endorsement of Upme and that could be installed on the dates set by their promoters, since it does not depend on expansions of the transport networks, an issue that on many occasions becomes he bottleneck to expand capacity of power generation.
If this Reliability Charge auction is not carried out and in 2027-2028 the electricity consumption of Colombians exceeds the latest projection of Upme (2,055 GWh/year) by 3 percent, under a critical condition scenario five months, rationing could cost Colombia 1.32 trillion pesos.
Instead, the payment of a Reliability Charge of $17.62 per megawatt hour for the 2,055 GWh/year It will cost 170,000 million pesos. Which would result in a benefit/cost ratio of eight times.
