Federico Echevarria of AES Colombia

If we want Colombia to develop non-conventional renewables at the levels of countries such as Chile, we need to make sure we have long-term PPAs.

Federico ECHEVARRIA General Manager AES Colombia

New power generation fronts in Colombia

March 5, 2019

Federico Echavarria, the general manager of AES Colombia, talks to TOGY about how renewables will reduce energy costs, how Colombia’s people are becoming more sophisticated energy consumers and the benefits of investing in energy storage technology. AES Colombia is a local subsidiary of AES Corporation, an electrical power generation and distribution company.

On changes in Colombia‘s energy sector: “As in nearly every other country, one receives energy from the grid and its corresponding matrix. In the case of Colombia, this mostly comes from hydro, but the future is changing. I think new technologies are going to affect grid dynamics and costs as we’re going to see more wind and solar farms being part of this energy matrix.”

On sophisticated consumers: “In the past, we had passive consumers because the only thing they were interested in was getting their energy contract. But things have changed. Today, we have more sophisticated energy consumers who also want to produce their own energy, to have information and be aware of what’s happening in the power sector.”

On sector openings: “There are plenty of opportunities. Smaller companies have noticed that renewables are a perfect product for the oil and gas sector. Thanks to renewable projects, they can have similar margins and provide similar solutions to the ones offered by NOCs such as Ecopetrol.”

Most TOGY interviews are published exclusively on our business intelligence platform, TOGYiN, but you can find the full interview with Federico Echavarria below.

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In which areas of renewable energy has AES been active?
2018 was very important because we managed to define a clear strategy aimed at continuing growth in the area of renewable energy. As of January 2019, we are a 100% renewable energy company in Colombia, and we want to become leaders in the country, offering a portfolio of non-conventional technologies. To do so, we have put forward an integrated strategy where we want to engage in solar and wind on top of hydro-based energy.
In terms of solar, we have invested in the Castilla project, which is a 20.4-MW solar farm in Ecopetrol’s Castilla oilfield. This facility provides clients with self-solar cell generation, which makes up a reliable, clean and renewable source of energy.
Also, wind is going to have an important role in the Colombian energy matrix. Not only are we interested in developing in the La Guajira region, but we are also keen on developing other parts of the country. We have advanced in this sense by launching a 125-MW project in Boyacá that is in the pre-feasibility stage.

How can renewables improve price competitiveness in the country?
As in nearly every other country, one receives energy from the grid and its corresponding matrix. In the case of Colombia, this mostly comes from hydro, but the future is changing. I think new technologies are going to affect grid dynamics and costs as we’re going to see more wind and solar farms being part of this energy matrix.
What is more, Ecopetrol did an analysis of its consumption needs, and it realised it could complement the energy it was buying from the grid with energy coming from self-generation facilities. This would mean a significant reduction of energy costs compared to the price paid to acquire energy from the grid.

 

How is the mentality changing in Colombia when it comes to acquiring energy?
In the past, we had passive consumers because the only thing they were interested in was getting their energy contract. But things have changed. Today, we have more sophisticated energy consumers who also want to produce their own energy, to have information and be aware of what’s happening in the power sector. They want to know when it’s more efficient to use the energy or save the energy.
We could say there has been a tremendous change in the energy sector in terms of mentality. Colombia is moving towards that direction, and we need to make sure that when we talk about business solutions, we think about it in a proactive way.

What opportunities do renewables open up for companies wanting to get contracts?
There are plenty of opportunities. Smaller companies have noticed that renewables are a perfect product for the oil and gas sector. Thanks to renewable projects, they can have similar margins and provide similar solutions to the ones offered by NOCs such as Ecopetrol.

What initiatives should the new administration work on to incentivise this sector?
Foremost, the government needs to facilitate long-term contracting. If we want Colombia to develop non-conventional renewables at the levels of countries such as Chile, we need to make sure we have long-term PPAs [power purchase agreements]. Moreover, the government is developing an auction that has been announced for the first quarter of 2019. We hope it is successful, as it could generate a competitive arena that is needed.
The most important thing is to promote competition within the sector. We believe all technologies should have the right to compete. In this sense, Colombia has been very open and we should continue on this path.

How is the attraction of investment important to reactivate the hydrocarbons industry in Colombia?
The energy sector in general is crucial for Colombia, a country that needs to further invest in this area, to develop and strengthen it. From here, the government has made efforts to welcome both foreign and private investment.
We have a set of robust regulations in place that guarantee a certain sense of trust and stability for the investor community, welcoming them into the market. Our biggest challenge is the need for growth. We need to see more exploration of the oil and gas sector. We need to see more power generation being built. Therefore, foreign- and private-based investment is fundamental.

How active is AES on the technology investment front?
Technologies are evolving very fast and, for this reason, we work with leading technology providers in the areas of solar and wind to enhance our performance in the projects we take part in. In our Castilla project, for example, we use high tech to make sure we actually deliver the required amount of energy in the most reliable way to Ecopetrol.
Over the last few years, we have focused on promoting energy storage technology in which we see high potential. We would like to bring this new line of technology into Colombia. What’s great about energy storage is that you can use it for multiple purposes and, therefore, it could be a solution for many challenges the energy sector has today.

What is the company’s strategy for the future?
We want to build 750 MW by 2025, so we want to invest both in growing in the country, while also making sure we continue preserving our assets in the areas of technology and infrastructure. In the next years, we will invest USD 100 million in Chivor to make sure we have a modern power generation facility. As long as we invest in technology, infrastructure, communities and the environment, we will last a long time in the market.

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