Renewable energies require long-term contracts – El Pilón

Since the beginning of the auction in Colombia, many experts have found that the most important step of investments in the alternative energy sector was the most important.

In the same way, during the whole week, the newspaper EL PILÓN kept the subject of solar energies on its agenda and closed with the forum "Renewable energies: a development without limits". At the meeting, in addition to the well-known conclusions about the benefits of renewables, a problem that began to change in Colombia was put on the table: long-term contracts.

The dependence of traditional energies on natural resources is known, which means that they are at high risk of scarcity in the face of any natural phenomenon. This happened in Colombia in 1992, 1998 and 2015: a rationing of energy that increased its prices.

But the form of their hiring is also a risk factor. Traditionally, electricity utilities in the Caribbean sign contracts of 3 or 5 years duration. According to Felipe Ibarra, an expert in energy project development, short-term contracts make companies fragile in the face of market dynamics. "Leaving the market to bid for energy supply or production requires the bidder to depend on price changes due to weather, supply or any other factor that may change prices," said the expert.

In this sense, long-term hiring (from 10 to 15 or 20 years) allows price stability, which does not give hiring in the short term.
"It is also more profitable to finance the long-term project with the banks." This is what Felipe Ibarra believes. The reason is for the payment terms and the interest rate. According to the expert, the longer the payment period, the lower the value of the program and the lower the interest rate. "Banks have been shown to find long-term stability projects more attractive and also ensure optimal use of resources," he added.

Not only the use of resources, but also machines acquired during purchases. If a long-term contract for energy production is signed, the investment in machinery will be more important, as will its use. "If I buy a machine with a profit of 25 years for a contract of 3 or 5 years, it is not very profitable," said Felipe Ibarra Lacouture, who is developing a wind project in the installed post of the municipality of San Juan del Cesar. The Guajira.

THE CLEAR MESSAGE THAT THE GOVERNMENT SENT

The auction of large scale alternative energy production projects was made public last week. According to the Ministry of Mines, 22 energy production projects from unconventional sources of renewable energy were presented: sun, wind and biombad.

"The auction to bring solar and wind energy to more Colombian households is attracting the interest of 27 companies, demonstrating that energy transformation is already underway ", he told the Ministry of Mines.
The goal of this first auction is to reach the first 500 megabytes of installed capacity in unconventional renewable energy sources.

Projects interested in participating have an installed capacity of 1,500 megawatts. We are talking about the production of 50 megabytes. A city like Ibagué needs to be transformed into an installed capacity of 1,500 megawatts of unconventional renewable energy sources, which Medellín and Cali need together.

For Ibarra, this is a message from the government that "the right path is long-term hiring that offers the stability that short-term hiring does not provide".

Thus, in the conclusions, several experts have finally indicated that from the point of view of promoters or promoters of renewable energy production projects, construction is not viable without bilateral contracts of less than 15 years.

DEIVIS CARO DAZA / EL PILÓN
[email protected]

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