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Colombia Power Report Q4 2011
Business Monitor International, Oct 2011, Pages: 47
BMI View: Colombia is another Latin American country with a worrying dependence on hydro-power which, because of drought-related issues, occasionally causes headaches for the electricity supply industry. With no nuclear projects in the pipeline and high costs associated with wind power, there is continuing investment in coal and gas-fired generation as the only practical alternative to hydro.
Hydro-electric sources are expected to dominate electricity generation in the coming years, although several power projects that are at the planning stage or under construction will use coal or gas. The government is looking to diversify away from hydro-power following the impact of droughts on water levels and electricity supply. However, there are few signs of a major shift towards thermal generation, with a government target of 50% installed thermal capacity by 2010 being missed by a wide margin.
According to the World Bank, harnessing wind power is still difficult in Colombia and it is not an economical option yet. This situation needs to change. A September 2010 World Bank study highlighted the potential of Colombia’s wind power, with the La Guajira region alone having the capability of providing more than 18GW of capacity. The World Bank concluded that in order for wind turbines to become a competitive option, it is necessary for Colombian policies to be more supportive. The country must strengthen wind power data collection as a public service, promote technological development and, most importantly, improve grid access to wind power.
During 2011-2015, Colombia’s overall power generation is expected to increase by an annual average of 3.7%, reaching 64.3TWh. Driving this growth will be annual gains of 4.0% and 5.8% in hydroelectric power and renewables generation respectively. Coal and gas-fired generation are forecast to increase by an average of 2.5% and 2.1% annually respectively. The government forecasts 3.1% annual growth in gas consumption through the end of the next decade, mainly due to the construction of new gas-fired power plants.
Following a forecast increase in real GDP of 4.6% in 2011, BMI expects average annual growth of 4.6% between 2011 and 2020. The population is forecast to rise from 46.9mn to 49.3mn over 2011-2020, while net power consumption looks set to increase from 44.9TWh to 52.9TWh by 2015, rising further to 63.9TWh by 2020. During 2011-2015, the average annual growth rate for electricity demand is forecast at 4.18%, but it is expected to slow to an average of 3.87% in 2016-2020.
Thanks partly to the forecast rise in net generation, growth of which falls short of the underlying demand trend, Colombia’s power supply shortfall is likely to increase over the short term, then stabilise later in the decade as new capacity kicks in. A gradual decline in the percentage of transmission and distribution losses from about 20% will help balance the market. The theoretical net import requirement by 2015 is put at 1.5TWh and it should be no more than 1.8TWh by 2020.
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