Grupo Energía Bogotá maps out LatAm expansion
BNamericas speaks to Astrid Álvarez, the CEO of Grupo Energía Bogotá, about the challenges facing Colombia's energy sector and the group's investment plans.
Álvarez will take part in the South America Energy Series (SAES) Colombia 2019 gas and renewables summit in Bogotá on June 20 and 21.
BNamericas: What are the biggest challenges facing the electric power sector in Colombia?
Álvarez: The sector has several challenges, including continuing with the energy transformation and promoting its sustainable growth. We have to take advantage of the benefits of a clean generation matrix to reduce emissions and increase the efficienof economic sectors such as transport and the industrial, residential and commercial segments. It should be noted that the country's energy matrix is one of the cleanest in the world, since close to 70% of the energy supply comes from hydroelectric power plants. As electricity demand increases, more unconventional renewable energy projects can be incorporated. However, it is important to have consensual planning with sector players to avoid oversupply or over-installation of the system that could affect the financial sustainability of the existing companies. This incorporation should take place as much as possible within a framework of competition with other technologies, including natural gas, which is a cleaner energy. It's also important to modernize the generation matrix with new technologies such as batteries and new mechanisms such as demand response, although always under competition schemes.
BNamericas: Regarding the tender for the new Pacific LNG plant in Colombia (in Buenaventura) and an associated gas pipeline, will GEB be involved in this project through its subsidiary TGI? And would TGI submit an offer alone or together with a partner or consortium?
Álvarez: Of course we're interested. We want Grupo Energía Bogotá to bring progress to Buenaventura with the regasification plant. In accordance with current regulations and the conditions for participation in the process of selecting the Pacific regasification infrastructure, TGI is authorized to participate. TGI has made public its intention to participate in the selection process. However, a decision won't be made until the mines and energy ministry planning unit (UPME) publishes the final selection documents. Additionally, TGI has a strategic ally with extensive experience in regasification.
BNamericas: What is the importance of that project? Would it open up opportunities for new gas-fired thermoelectric plants in southwestern Colombia?
Álvarez: It's a strategic project for Colombia. It's necessary for the country. The Pacific regasification infrastructure is a project identified by UPME and the mines and energy ministry as key to guarantee reliability in Colombia's natural gas system and supply the sector in the event that new gas production can't be incorporated into the system from 2023. In addition, this plant could become the most reliable and competitive source of supply for the thermoelectric plants that are currently operating in the interior of the country, also guaranteeing the security of national electricity supply, especially in critical periods such as the El Niño phenomenon.
BNamericas: How are the transmission projects that are part of the Caribbean Plan 5 progressing?
Álvarez: We're doing very well and getting stronger on the Caribbean coast. Grupo Energía Bogotá currently has the Río Córdoba and Bolívar-Cartagena projects in operation, which have improved the reliability of the electricity system in the Caribbean region. Likewise, in the coming months [we] will put the La Loma project into operation in Cesar department. Additionally, UPME awarded us the La Colectora project, which will transport energy generated by wind farms in La Guajira to the rest of the country. The project is in the environmental permitting phase and is progressing according to the proposed schedule.
BNamericas: Does GEB or its subsidiaries plan to participate in the relaunched tender process for Electricaribe?
Álvarez: Grupo Energía Bogotá constantly evaluates the opportunities that arise in the market for its growth. However, it must be taken into account that the natural expansion of the electricity distribution business of the group in Colombia is through Codensa.
BNamericas: Is GEB looking to increase its transmission project portfolio this year?
Álvarez: Definitely, we are interested in new projects, new options. Our goal is very clear: to continue growing in Colombia and in other Latin American countries. In Colombia, UPME has recently published six calls, which we're evaluating in order to define our participation. Likewise, we're studying new connection options with private users (large users and generators), as well as our participation in projects involving new technologies, such as high voltage direct current (HVDC) and storage. In Colombia we're continuing with the execution of 12 transmission projects through which we'll increase the transmission network from 1,523km to more than 3,800km. These are green corridors, which in addition to bringing energy and progress to the regions, allow us to protect the environment.
In Guatemala, we're involved in the PET transmission expansion plan, one of the most important electric power projects in Central America with an extension of 863km. And in Peru, we are helping to advance the country's natural gas expansion through our companies Cálidda and Contugás. We have 76% of the natural gas distribution market in the country.
BNamericas: The government has also announced plans to relaunch the tender for long-term renewable energy contracts after the failure of the first auction of this type in February. Does GEB plan to participate?
Álvarez: The mines and energy ministry submitted comments on its proposal to adjust the rules for what will be the second auction, guaranteeing that market conditions and plurality of suppliers and technologies prevail. We channel all our investments in electricity generation in Colombia through the participation in Emgesa, so it should be this company that analyzes the potential participation in the auction if necessary.
BNamericas: What are the changes that must be made in the next auction to avoid repeating the February result?
Álvarez: It's important that the auction is voluntary and attractive for the demand side. In this sense, it's important that the contracts guarantee the coverage that's required in the face of the variability of spot market prices. Risks must be allocated to those who can best manage them. Positive proposals for the new auction include requirements that the demand side pays for the energy it contracts, that the price paid is in Colombian pesos and that contracts be valid for 12 years.
BNamericas: Do you see opportunities for future investments in hydroelectric power projects in Colombia given the Hidroituango crisis or do you think that large-scale power generation projects will now be limited to solar, wind and gas power plants?
Álvarez: Colombia has a robust electric generation sector with one of the cleanest mixes in the world. This is something that we must keep in mind beyond the specific issues. Obviously the diversification of the matrix is a positive factor for the country and will allow Colombia to reduce risks in moments of extreme climatic phenomena. In this sense, we're a group that has openly bet on the diversification of the matrix with initiatives as important as the Colectora project that will transport the energy coming from the wind projects of the Guajira to the interior of the country. Additionally, we're faithful supportersof the Pacific regasification project, which will contribute to the country's energy security.