COLOMBIA: INFORMATION FOR RENEWABLE ENERGY

UNCLAS BOGOTA 004086 SIPDIS EEB/IFD/OIA FOR MCULLINANE; WHA/EPSC FOR FCORNIELLE; OES/STC FOR TBURNS; STATE PASS TO OPIC E.O. 12958: N/A TAGS: ENRG EINV SENV PGOV OPIC CO SUBJECT: COLOMBIA: INFORMATION FOR RENEWABLE ENERGY INITIATIVES REF: STATE 100170 ¶1. SUMMARY: The following information on Colombia's energy sector is provided in response to reftel request. Colombia is working to expand its renewable energy output and offers extensive opportunities for increased investment in wind, solar, geothermal, biomass/biofuels, and hydroelectric projects. In September, the United States and Colombia signed a memorandum of understanding to advance bilateral cooperation on renewable and clean energy, including biofuels, which provides a framework for increased cooperation. END SUMMARY. Overview -------------- ¶2. Despite a decline in domestic petroleum production since the late 1990s, Colombia remains a net energy exporter and expects to increase both traditional and renewable energy output over the next decade. Colombia attracted over USD 3.3 billion in foreign direct investment to its energy sector in ¶2007. While most of the investment flowed to the oil, gas and coal sectors, renewable energy offers promising opportunities. Currently, Colombia has only 28.1 megawatts (MW) of installed renewable energy capacity, excluding hydropower, consisting mainly of wind power. Nevertheless, Colombia has significant wind, geothermal, biofuels, and solar resources that remain largely unexploited. Wind Energy -------------- ¶3. Colombia has an estimated wind power potential of 21 gigawatts (GW) in the northern department of La Guajira, which is home to class 7 winds (i.e. over 10 meters per second). Only the Patagonia region of Chile and Argentina offers that class of wind capacity elsewhere in Latin America. At present, Colombia's installed wind capacity totals only 19.5 MW or 0.4 percent of total wind potential. The capacity is concentrated in the Jepirachi Wind Project, developed by the Medellin Public Utility (EPM) company under a carbon finance mechanism arranged by the World Bank. However, several projects are under consideration, including a potential 200 MW project in Ipapure. Solar -------------- ¶4. Colombia has significant solar capacity due to its location near the equator. However, Andean climatic conditions limit ideal collection areas. Average daily radiation totals 4.5 kilowatt hours per square meter (kWh/m2) with the highest averages (6 kWh/m2) registered in the Guajira peninsula. Of the 6 MW of installed solar power in Colombia, 57 percent is used in rural electrification applications and the remainder in communications towers and road signals. Geothermal -------------- ¶5. The Colombian Electric Power Institute (IPSE) has identified three areas of Colombia with strong geothermal power potential: near the Azufral volcano, Narino Department; near the Chiles volcano, Narino Department; and Paipa, Boyaca Department. While geothermal power is still only in the exploratory stage, the U.S. Trade and Development Agency (USTDA) has funded a USD 599,000 feasibility study to support the development of a 50 MW geothermal power generation project with Colombia's state-owned power generation company ISAGEN. Biomass/Biofuels -------------- ¶6. Colombia has significant biomass power generation potential based on agricultural waste from large industries including bananas, coffee, and livestock. The Colombian government estimates potential capacity at 16 GW. The Uraba region of Antioquia Department, with 19,000 hectares of banana plantations producing more than 1 million tons of biomass annually, as well as Colombia's coffee growing region are the most promising areas for biomass-fueled electrical generation. ¶7. The GOC has implemented an aggressive national biofuels development plan. Colombia currently has five privately owned ethanol plants and is scheduled to have six operational private biodiesel plants by mid-2009. The GOC has aggressively pursued biofuels as a means of reducing pollution in major metropolitan areas, generating rural employment alternatives to narcotics cultivation, and diversifying its transportation fuel supply. Specifically, the GOC has implemented a series of tax incentives and blending mandates of renewable biodiesel (5 percent) and ethanol (10 percent) into diesel and gasoline transportation fuel supplies to support the industry. Although Colombia is still working to meet the existing blending requirements, the mandates are scheduled to rise to 20 percent by 2015, further increasing biofuels demand. The GOC has also publicly pledged to develop the industry without destruction of native ecosystems through use of degraded or underutilized agricultural lands already in production. Hydroelectric -------------- ¶8. According to GOC figures, hydroelectric power currently accounts for 78 percent of Colombia's electricity generation (13,600 MW) with almost 3,000 MW of additional capacity under construction through six new plants scheduled for completion by 2018. The new plants, located in Tolima, Huila, Antioquia, Caldas and Santander Departments, represent USD 5 billion in investment and will be built and operated by Grupo Endesa (Spain),Union Fenosa (Spain),ISAGEN (Colombia-Public/Private),and EPM (Colombia-Public). In addition to supplying rising domestic demand with emissions-neutral renewable hydroelectric power, Colombia aims to sell excess capacity to regional neighbors including Brazil. Colombia currently exports a small amount of electricity to Ecuador. ¶9. The GOC estimates total large-scale hydroelectric potential in Colombia to reach 93 GW with an additional 25 GW of small-scale hydroelectric plant potential. However, the potential for large hydropower faces challenges as the best sites have been developed, increasing environmental and social displacement concerns, and climate changes affecting rainfall. Memorandum of Understanding -------------- ¶10. On September 18, 2008, Secretary Rice signed a memorandum of understanding with Colombian Foreign Minister Bermudez to advance cooperation on renewable energy by promoting research exchange, alternative development activities, investment in clean energy, and the alignment of biofuels standards and codes. To date, State Department and U.S. Department of Agriculture funds have supported exchanges of experts on sustainable biofuels development and Colombia has joined the Global Bioenergy Partnership (GBEP) to share its experiences in developing renewable energy. Points of Contact -------------- ¶11. Primary Embassy point of contact is Deputy Economic Counselor William Popp (poppww@state.gov; tel: 011-571-383-2780). Back-up point of contact is Economic Counselor Lawrence Gumbiner (gumbinerlj@state.gov; tel 011-571-383-2448) BROWNFIELD