Colombia is planning two important power auctions to take place at the beginning of 2019.
Reliability Charge Auction
A reliability charge auction (Subasta para la Asignación de las Obligaciones de Energía Firme del Cargo por Confiabilidad) will award firm energy obligations (obligaciones de energía firme or "OEF") for the supply period commencing on December 1, 2022 and ending on November 30, 2023 or a later date for certain projects.
Important points of note are the following:
- Payments to generators will be made in U.S. Dollars.
- Both greenfield and brownfield projects are eligible to participate in the auction.
- Greenfield projects could obtain OEF commitments for periods of between 1-20 years.
- In order to encourage investment, certain incentives will be given to greenfield projects that begin commercial operations prior to December 1, 2022. Such incentives include bonus payments above the price set by the auction and extensions of the OEF commitment periods.
Key dates to take into account are the following:
| Action Item | Date |
|---|---|
| Deadline for interested parties to submit application materials | December 14, 2018 |
| Deadline for applicants to submit firm energy commitments | January 8, 2019 |
| Auction takes place | January 24, 2019 |
| Publication of auction results | January 25, 2019 |
| Commitments awarded | 20 business days following January 25, 2019 |
Wholesale Energy Production Auction
The second event is an auction for wholesale energy production contracts to be awarded for renewable projects. The auction will offer generators 10-year power purchase agreements for 3.443GWh per year in the aggregate.
Colombia's energy planning unit–UPME–has published a draft Long-Term Power Purchase Agreement (Contrato de Compra y Venta de Energía Media Anual a Largo Plazo or the "PPA") for this auction providing for the following:
- Purchasers under the PPA will be representatives of the wholesale energy market in Colombia.
- Sellers will receive (i) a reliability charge (CERE) which is to be paid in U.S. Dollars and in accordance with applicable law and (ii) an energy payment for electric power that is delivered under the PPA payable in Colombian Pesos.
- Both brownfield and greenfield projects are eligible to participate in the auction, and greenfield projects will be required to start commercial operations on or prior to December 1, 2022.
- Upon termination following a default by one of the parties, the non-defaulting party will be entitled to invoke the "Penalty Clause" (i.e. Clause 13 of the PPA), pursuant to which the affected party will have the right to receive a payment of 20% of the remaining contract value.
Key dates to take into account are the following:
| Action Item | Date |
|---|---|
| Final draft of the PPA and bidding rules to be published | November 1, 2018 |
| UPME to hold an informational training seminar for interested participants | November 13, 2018 |
| Pre-qualification materials to be submitted by interested participants | November 23, 2018 |
| Results of pre-qualification to be published | December 17, 2018 |
| Auction takes place | January 2, 2019 |
| PPAs are awarded/signed | January 14, 2019 |
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