Colombia Renewable Energy Market, By Type (Hydroelectric Power, Wind Power, Bioenergy, Solar Energy, and Geothermal Energy) and End Use (Residential, Commercial, Industrial, and Others), By Region, Competition, Forecast and Opportunities, 2028

Market Overview

The Colombia Renewable Energy Market, valued at USD 6.12 Billion in 2022, is poised for robust growth in the forecast period, with an anticipated Compound Annual Growth Rate (CAGR) of 3.50% through 2028. Renewable energy encompasses energy sources that are naturally replenished and sustainable over time, distinct from finite fossil fuels. It harnesses abundant resources like sunlight, wind, water, and organic matter, leveraging Earth's natural processes to produce usable power without depleting finite reserves or causing lasting environmental harm.

Solar energy captures sunlight via photovoltaic cells or solar thermal systems to generate electricity or heat. Wind energy harnesses kinetic energy from moving air through wind turbines, converting it into electrical power. Hydropower uses the gravitational force of flowing water to turn turbines and produce electricity. Biomass energy derives from organic materials like wood, crop residues, and waste, either burned or converted into biofuels for energy production. Geothermal energy taps Earth's internal heat, using underground steam or hot water to generate power. Renewable energy technologies offer multiple benefits, including reduced greenhouse gas emissions, improved air quality, and reduced dependence on fossil fuels. As technology advances and economies of scale improve, renewable energy plays a pivotal role in the global shift towards a more sustainable and resilient energy future.

Key Market Drivers

Colombia's Drive Towards Renewable Energy

Colombia has actively pursued the development of renewable energy sources, propelled by various factors that underpin its energy transition and sustainable development. These drivers reflect the country's rich natural resources, commitment to environmental stewardship, and economic diversification. Here are the primary drivers behind Colombia's renewable energy market

1. Abundant Natural ResourcesColombia boasts abundant natural resources that favor renewable energy generation. The country's rivers and water bodies offer substantial potential for hydroelectric power, while diverse regions feature solar and wind energy resources.

2. Government Policies and IncentivesThe Colombian government has instituted policies and incentives to foster renewable energy investment. These measures encompass tax incentives, subsidies, and regulatory frameworks that facilitate the development and integration of renewable energy projects into the national energy mix.

3. Climate CommitmentsColombia is dedicated to reducing greenhouse gas emissions and mitigating climate change. Adopting renewable energy aids the nation in meeting international climate commitments while contributing to global climate change mitigation efforts.

4. Energy Security and DiversificationInvestment in renewable energy sources bolsters Colombia's energy security by diversifying its energy mix. This reduces dependence on fossil fuel imports, enhancing the country's energy resilience.

5. Local Economic DevelopmentRenewable energy projects drive job creation and stimulate local economic development. They demand skilled labor for construction, operation, and maintenance, thereby generating employment opportunities in both rural and urban areas.

6. Technological AdvancementsOngoing advances in renewable energy technologies, such as improved solar panels, wind turbines, and energy storage solutions, enhance efficiency and cost-effectiveness. These advancements make renewable sources increasingly attractive for energy generation.

7. Private Sector ParticipationThe private sector actively engages in renewable energy projects, drawn by the sector's potential for long-term investment and growth.

8. International CollaborationColombia collaborates with international organizations and partners to access funding, technology transfer, and expertise for renewable energy projects. Such collaboration supports the country's efforts to accelerate its renewable energy development.

Overall, Colombia's pursuit of renewable energy is driven by a synergy of environmental consciousness, economic vitality, and social progress, aligning with the global trend towards cleaner and more sustainable energy systems.

Supportive policies and Regulations are Likely to Propel the Market

Colombia has implemented a range of supportive policies and incentives to promote the development and integration of renewable energy sources into its energy mix. These policies aim to encourage investment, increase renewable energy capacity, and contribute to the country's sustainable development goals. Some of the key renewable energy supportive policies in Colombia include

Law 1715 of 2014

Renewable Portfolio Standard (RPS

Tax Incentives

Power Purchase Agreements (PPAs

Net Metering

Clean Energy Certificates (CELs)

National Development Plan

Research and Innovation

Grid Integration

Key Market Challenges

While Colombia has made significant strides in promoting renewable energy, several challenges persist that can affect the widespread adoption and integration of these clean energy sources

Grid Integration and Stability

Intermittency and Reliability

Financial and Investment Barriers

Permitting and Regulatory Hurdles

Land Use and Environmental Concerns

Technological Readiness and Skill Development

Lack of Infrastructure in Remote Areas

Energy Market Dynamics

Public Awareness and Acceptance

Lack of Long-Term Planning

Addressing these challenges requires a holistic and coordinated approach involving government agencies, industry stakeholders, local communities, and international partners. Overcoming these obstacles will contribute to Colombia's transition toward a more sustainable and renewable energy future.

Segmental Insights

Solar Energy Insights

The Solar Energy segment established its dominance in the renewables energy market in 2022 and is projected to maintain its position throughout the forecast period. Colombia's proximity to the equator gives it ample sunlight throughout the year. Regions such as La Guajira, the Caribbean coast, and parts of the Andean region receive high solar irradiance levels, making them suitable for solar energy generation. Falling solar panel prices and advancements in technology have made solar energy more economically viable. As solar costs continue to decrease, it becomes increasingly competitive with conventional energy sources, fostering its adoption. Solar energy can contribute to diversifying Colombia's energy mix, reducing dependence on hydropower and fossil fuels. This diversification enhances energy security and resilience, especially during dry periods when hydropower generation may be constrained. The solar energy market in Colombia is gradually growing, with utility-scale solar projects, commercial installations, and residential solar becoming more common. Collaborative efforts between the public and private sectors can accelerate market growth.

Residential Insights

Regional Insights

Caribbean RegionThis region has the highest potential for solar and wind energy development in Colombia. The average solar radiation in the region is around 5.5 kWh/m2/day, which is well above the global average of 3.5 kWh/m2/day. The wind speed in the region is also favourable for wind energy development, with average wind speeds of around 7 m/s. The Colombian Caribbean region is home to about 55% of the existing renewable energy projects in the country. The Colombian government has identified the Caribbean Region as the priority region for renewable energy development. The government has also launched several initiatives to promote the development of renewable energy in the country, such as the National Development Plan 2018-2022 and the Energy Transition Law. The development of renewable energy in Colombia is expected to help the country meet its energy needs, reduce its dependence on fossil fuels, and mitigate climate change.

Recent Developments

In May 2023,

In April 2023,

In March 2023,

In February 2023

In January 2023

Key Market Players

• Celsia Colombia Saesp
• DNV GL AS
• Enel Green Power S.p.A.
• EDP Renovaveis SA
• Ventus Ingeniería S.R.L
• Ecopetrol S.A
• Empresas Publicas de Medellin
• ISAGEN S.A  E.S.P
• ABO Wind Renovables Colombia S.A.S.