WINDS OF CHANGE

Colombia 2017 | GREEN ECONOMY | FOCUS: LA GUAJIRA

Renewable energy initiatives on a remote, windy peninsula are leading the way on Colombia's voyage to become the Latin American leader in green energy development.

Back in 1499, Spanish navigator Juan de La Costa named a remote South American promontory Cabo de la Vela, or Cape of Sails. Allegedly, he was so impressed by the winds swirling over its wild territories that the designation came almost automatically. Five centuries later, those lands may no more belong to the Spanish Kingdom, but wind could be just as relevant as it used to be for Queen Isabel's caravels.

The Colombian department of La Guajira, in which Cabo de la Vela is located, is home to the first and only major green energy project in the country's history under the UN's Clean Development Program. According to the Minister of Environment and Sustainable Development, Luis Gilberto Murillo, the government is planning to further establish seven major solar and wind projects that alone could power all of Colombia.
One of the largest wind projects in the pipeline is the Jouktai Wind Farm, developed by ISAGEN and with a potential of 31.5MW, which required an initial funding of USD60 million. Moreover, the Ipapure Wind Farm project, with an estimated initial capacity of 200MW, recently finished its preliminary control and is also expected to start operating in the short term. If implemented and properly supported, these investments will add to Carrizal, Casa Electrica, and Irraipa, three wind power projects registered in 2015 that will produce 474MW, according to IPD Latin America.

Wind is not the only precious asset La Guajira has to offer. The region offers the best solar resource, with 6kWh per sqm of radiation compared to a national average of 4.5kWh per sqm. More specifically, the most substantial potential for large-scale solar generation is to be found in the Orinoco and San Andrés areas, in the northern part of the country. It is here, unsurprisingly, that both the Ministry of Mines and Energy and the Institute of Planning and Promotion of Energy Solutions for non-interconnected zones (IPSE) have been implementing a series of photovoltaic systems to exploit the peninsula's privileged status.

However, rigid financing schemes are still seen as the major barrier for foreign investors who are not familiar with the region. The central government will thus be charged with crafting a comprehensive regulatory framework that sets the precedent for future transactions. Indeed, local banks and multilateral consortiums cannot rely solely on the Financial Support Fund for Energy Provision in Non-Interconnected Zones (FAER) created in 2000. While this fund has proven to be an important tool for the financing of projects in areas not connected to the national grid, it still lacks a far-reaching incentives scheme that facilitates fast capitalization.
In this sense, a crucial regulative step was made in May 2014 with Law 1715, which guaranteed the removal of value-added tax and tariffs on imports for green energy projects, along with a favorable tax scheme in the medium run for firm's assets. The law fell into the wider three-year National Development Plan launched in 2014, through which the government places green growth at the heart of a long-term sustainable development strategy.

Overall, the Latin American renewable energy market remains widely untapped, with Mexico and Brazil leading the way by building turbine infrastructure and thoroughly studying the European model of harnessing wind, according to Ramón Fiestas, chairman of the Global Wind Energy Council's Latin American Committee.
With only 1% of power supplied by wind, solar, and other renewable sources, Colombia seeks to bridge the gap with the other two major regional players. Far from the major cities of Colombia's interior, potable water is scarce in La Guajira and electricity is a luxury. Yet, it is from this remote peninsula that the winds of change are blowing.