Post on 16-Jan-2020
Alternatives to Include Non-conventional Sources
of Renewable Energy in the Colombian Energy
Matrix
First International Conference on Renewable Energy
March 2017
Page 2
Contents
01 Objective and Scope of the Study
02 Complementarity Analysis
03Proposal to Include Non-conventional Sources of Renewable Energy in the Colombian
Energy Matrix
04 Analysis of Proposal's Impact
05 Possible Questions about the Proposal
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Objective and Scope of the Study
1
Page 4
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Scope▪ To propose an alternative mechanism to promote the inclusion of FNCER that is sustainable and feasible, taking into account
the way the wholesale energy market operates, as well as existing barriers.
▪ Assessment of the impact of the inclusion of FNCER in the Colombian energy matrix.
Objective▪ To assess viable expansion mechanisms to include Non-conventional Sources of Renewable Energy (FNCER, for the Spanish
original) in the Colombian energy matrix by reviewing technical, economic and financial aspects as well as quantitative
balances of the cost/benefit relations.
Complementarity Analysis
2.1 Complementarity with resources and energy
2.2 Complementarity with demand
2.3 Complementarity with spot market price
2
Complementarity Analysis
2.1 Complementarity with resources and energy
2.2 Complementarity with demand
2.3 Complementarity with spot market price
2
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Base Information
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
1 Measuring the resource
Information on real measurements of natural resources for the 2000-2015 period.
Solar photovoltaic (NREL):
Hourly measurements of:
• Direct irradiance
• Diffuse irradiance
Wind (Vestas):
Hourly measurements of:
• Wind speed at 80 m/s
• Atmospheric pressure
• Air temperature
• Wind direction
In addition, other resource measurements provided by SER Colombia member companies were taken as reference.
2Location
Guajira: 2 Solar and 1 wind power plants
Santander: 2 Solar and 1 wind power plants
✓ Land availability
✓ Location in latitude and longitude
3Penetration scenarios
Solar photovoltaic (MW) Wind (MW)
Best 300 2,000
Regular 170 800
Worst 50 300
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Complementarity AnalysisMethodology
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Definition of scenarios
• Records of UPME generation projects: • Best scenario • Regular scenario • Worst scenario
• Technical restrictions• Resource penetration in LATAM
Definition of hourly generation
• Solar: NREL SAM and generation data for SER Colombia member companies
• Wind: Approximation of Rayleigh capacity factor and generation data for SER Colombia member companies
Base information identification
Measuring the resource
• Solar (NREL): Direct and diffuse irradiance• Wind* (Vestas and NASA): Temperature, speed,
pressure and direction
Plant location• Land availability
• Latitude and longitude
• Water resource: Contribution in flow rates XM
• Solar resource: Direct irradiance NREL• Wind resource: Wind speed Vestas
Complementarity by resource
• Hydraulic power generation (XM)
• Solar and wind power generation
• Generation behavior (2000-2016)
Complementarity of generation
• Regulated and non-regulated market demand (XM)
• Hydraulic power generation (XM)
• Solar and wind power generation
Complementarity with demand
• Weighted monthly spot market price
• Hydraulic power generation (XM)
• Solar and wind power generation
Complementarity with spot market price
* Average wind speed at a heightof 80 m covering the area of interest. The analysis of the wind resource was conducted using “mesoscale atmospheric modeling”
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Complementarity AnalysisWind and Hydraulic Energy
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
• Correlation between contributions in flow rates and wind speed:
-0.15
• Correlation between hydraulic and wind power generation:
-0.13
Contribution in flow rates vs. Wind speedWind power generation vs. Hydraulic power
generation
Behavior of wind power generation
Source: Data from XM, NREL, VESTAS; In-house preparation
Page 10
Complementarity AnalysisWind and Hydraulic Energy
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
• Correlation between contributions in flow rates and wind speed:
-0.15
• Correlation between hydraulic and wind power generation:
-0.13
Contribution in flow rates vs. Wind speedWind power generation vs. Hydraulic power
generation
Behavior of wind power generation
Source: Data from XM, NREL, VESTAS; In-house preparation
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Complementarity AnalysisWind and Hydraulic Energy
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Contribution in flow rates vs. Wind speed - 2007Wind power generation vs. Hydraulic power generation -
2007
Contribution in flow rates vs. Wind speed - El NiñoWind power generation vs. Hydraulic power generation - El
Niño
Correlation 2009 – 2010
-0.48
Correlation 2015 – 2016
-0.43
Correlation 2009 – 2010
-0.53
Correlation 2015 – 2016
-0.51
Source: Data from XM, NREL, VESTAS; In-house preparation
Correlation 2007
-0.39
Correlation 2007
-0.32
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Complementarity AnalysisSolar and Hydraulic Energy
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Contribution in flow rates vs. IrradianceSolar power generation vs. Hydraulic power
generation
Behavior of solar power generation
• Correlation between contributions in flow rates and irradiance:
-0.51
• Correlation between hydraulic and solar power generation:
-0.25Source: Data from XM, NREL, VESTAS; In-house preparation
Page 13
Complementarity AnalysisSolar and Hydraulic Energy
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Contribution in flow rates vs. IrradianceSolar power generation vs. Hydraulic power
generation
Behavior of solar power generation
• Correlation between contributions in flow rates and irradiance:
-0.51
• Correlation between hydraulic and solar power generation:
-0.25Source: Data from XM, NREL, VESTAS; In-house preparation
Page 14
Complementarity AnalysisSolar and Hydraulic Energy
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Contribution in flow rates vs. Irradiance – 2007Solar power generation vs. Hydraulic power generation -
2007
Contribution in flow rates vs. Irradiance - El NiñoSolar power generation vs. Hydraulic power generation - El
Niño
Correlation 2009 – 2010
-0.41
Correlation 2015 – 2016
-0.79
Correlation 2009 – 2010
-0.71
Correlation 2015 – 2016
0.001
Source: Data from XM, NREL, VESTAS; In-house preparation
Correlation 2007
-0.29
Correlation 2007
-0.63
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Complementarity AnalysisNon-Conventional Renewable Energy and Hydraulic Energy
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Hydraulic power generation vs. Renewable energy Solar power generation vs. Hydraulic power generation (2007)
Renewable power generation vs. Hydraulic power generation - El Niño
• Correlation between renewable and hydraulic energy(2000-2015):
-0.16
Source: Data from XM, NREL, VESTAS; In-house preparation
Correlation 2007
-0.40
Correlation 2009 – 2010
-0.50
Correlation 2015 – 2016
-0.43
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Complementarity AnalysisRenewable and Hydraulic Energy
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Hydraulic power generation vs. Renewable energy Solar power generation vs. Hydraulic power generation (2007)
Renewable power generation vs. Hydraulic power generation - El Niño
• Correlation between renewable and hydraulic energy(2000-2015):
-0.16
Source: Data from XM, NREL, VESTAS; In-house preparation
Correlation 2007
-0.40
Correlation 2009 – 2010
-0.50
Correlation 2015 – 2016
-0.43
Complementarity Analysis
2.1 Complementarity with resources and energy
2.2 Complementarity with demand
2.3 Complementarity with spot market price
2
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Complementarity AnalysisRenewable Energy and Demand
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Demand and wind
energy
Demand and solar
energy
Wednesday, August 21, 2013 Sunday, August 24, 2013
Source: Data from XM, NREL, VESTAS; In-house preparation
METER CORRELACIONES
Correlation
0.42
Correlation
0.53
Correlation
0.07
Correlation
0.03
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Complementarity AnalysisRenewable Energy and Demand
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Demand and non-conventional
renewable energy
Source: Data from XM, NREL, VESTAS; In-house preparation
METER CORRELACIONES
Wednesday, August 21, 2013
Correlation
0.1
Sunday, August 24, 2013
Correlation
0.06
Complementarity Analysis
2.1 Complementarity with resources and energy
2.2 Complementarity with demand
2.3 Complementarity with spot market price
2
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Complementarity AnalysisRenewable Energy and Spot Market Price
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Hydraulic power generation vs. Spot market price Total generation (H+S+E) vs. Spot market price
Source: Data from XM, NREL, VESTAS; In-house preparation
Proposal to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
3
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ProposalObjectives
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
2. Maintain the reliability of the national electricity system
4. Have more efficient dispatch reflected in market prices.
3. Increase market competition with the introduction of new agents.
5. Promote competitive centralized, anonymous energy supply contract processes that reveal efficient prices.
6. Reduce the deficit in the contract market (those that provide coverage in price and quantity).
7. Make it possible for sellers to sign long-term contracts.
1. Provide a proposal that is sustainable and harmonious with the current market
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ProposalGeneral Aspects
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Centralized anonymous mechanism
Product - Medium EnergyEnergy supply contracts at
a fixed price(20 years)
Pass-through to regulated users
Completely transfer the contract price
(α factor does not apply)
Energy sales auction In addition to the reliability charge
Generators • All technologies • New power plants
Supply• Medium energy (MWh/year) • Fixed price (USD/MWh)
Firm Energy Obligations• Price takers• 20 years
Energy purchase auction
Sellers
Phase 1: Regulated and non-regulated users participate voluntarily
Phase 2: The supply surplus is allocated to the regulated demand at pro rata
Supply• Amount of energy (MWh/year) • Fixed price (USD/MWh)
Other aspects• Currency:
• Indexation:
• Dispatch:
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ProposalSales Auction – Mechanism to Set Prices and Allocate Amounts
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Marginal price Pay - As - Bid
Blind auction
Price formation mechanism Amounts allocation mechanism
Who should pay the demand? Weighted average for the amount of energy of the prices of projects awarded at the auction.
Source: In-house preparation Source: In-house preparation
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ProposalPurchase Auction – Mechanism to Set Prices and Allocate Amounts
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
English auction
Closing price of the energy sales auction
Price resulting from an English auction
Source: In-house preparation
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ProposalLiquidation Mechanism
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Source: In-house preparation
¿PContract i <= PSpot i ?
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ProposalLiquidation Mechanism
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Generator
With average annual energy commitment
When GReal >= GCommitted
When GReal < GCommitted
Probability of occurrence
Generator Trust >0
When ~PC>=~PB
Generator Trust <0
When ~PC<~PB
56.2%
0.0%
18.7%
25.1%
Plant MW USD/MW
S1 75 49.5
S2 75 45.7
S3 75 41.0
S4 75 43.9
E1 500 56.5
E2 1,500 43.5
Generator Trust >0
When ~PC>=~PB
Generator Trust <0
When ~PC<~PB
Results
Surplus for the generator
Deficit to be covered by the demand
Surplus for the demand
Deficit to be covered by the generator
Analysis of Proposal's Impact
4.1 El Niño phenomenon and the Apagar Paga program
4.2 4.2 Contributions to the system's reliability
4.3 Coverage of demand
4
Analysis of Proposal's Impact
4.1 El Niño phenomenon and the Apagar Paga program
4.2 Contributions to the system's reliability
4.3 Coverage of demand
4
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Analysis of Proposal's impactEl Niño Phenomenon
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Exhibition AreaGeneration
GWhGoal
Real without renewable energy
6,940 5%
Worst scenario 7,082 2.05%
Regular scenario 7,418 Not needed
Best scenario 7,820 Not needed
1 Generation
July 2015-June 2016 July 2015-June 2016
Without renewable energy With renewable energy
9,327 GWh 5,424 GWh
2,209 1,272
Million USD Million USD
938Million USD*
2 System
Impact on the Apagar Paga program
Energy purchases
Energy purchases $$
Savings$$
Source: Data from Mining Ministry, XM, NREL. VESTAS, In-house preparation
*Does not include the FNCER generation cost (USD 204 million)
Net savings: USD 734 million
Analysis of Proposal's Impact
4.1 El Niño phenomenon and the Apagar Paga program
4.2 Contributions to the system's reliability
4.3 Coverage of demand
4
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Analysis of Proposal's ImpactContribution to the System's Firm Energy
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
36.07 (GWh)Jan 1, 2010
0.51 (GWh)May 27, 2008
YearAnnual savings
(in USD millions)
2008 USD 37.6
2009 USD 37.6
2010 USD 37.7
2011 USD 38.5
2012 USD 39.2
2013 USD 39.5
2014 USD 40.0
2015 USD 40.4
Savings (2008 – 2015): USD 311 million
Source: Data from XM, NREL, VESTAS; In-house preparation
4.21 (GWh)Aug 3, 2010
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Analysis of Proposal's ImpactContribution to the System's Firm Energy
48.13 (GWh)Jan 1, 2010
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Source: Data from XM, our own preparation
Firm energy increase 33.4%
YearAnnual savings
(in USD millions)
2008 USD 37.6
2009 USD 37.6
2010 USD 37.7
2011 USD 38.5
2012 USD 39.2
2013 USD 39.5
2014 USD 40.0
2015 USD 40.4
Savings (2008 – 2015): USD 311 million
Analysis of Proposal's Impact
4.1 El Niño phenomenon and the Apagar Paga program
4.2 Contributions to the system's reliability
4.3 Coverage of demand
4
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Analysis of Proposal's impactCoverage of Demand
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Hydraulic power generation vs. Spot market price
~22%
Balance 2010 - 2015
Exhibition Area (Millions of USD)
Best 567.9
Regular 240.6
Worst 93.9
Exposed demand
Source: Data from XM, our own preparation
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Analysis of Proposal's impactCoverage of Demand
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Hydraulic power generation vs. Spot market price
~22%~20%
Exposed demand
Balance 2010 - 2015
Exhibition Area (Millions of USD)
Best 567.9
Regular 240.6
Worst 93.9
Source: Data from XM, our own preparation
Page 38
Analysis of Proposal's impactCoverage of Demand
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Hydraulic power generation vs. Spot market price
~22%~20%
~17%
Exposed demand
Balance 2010 - 2015
Exhibition Area (Millions of USD)
Best 567.9
Regular 240.6
Worst 93.9
Source: Data from XM, our own preparation
Page 39
Analysis of Proposal's impactCoverage of Demand
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Hydraulic power generation vs. Spot market price
~22%~20%
~17%
~10%
Exposed demand
Balance 2010 - 2015
Exhibition Area (Millions of USD)
Best 567.9
Regular 240.6
Worst 93.9
Source: Data from XM, our own preparation
Possible questions about the proposal
5
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Possible Questions about the ProposalDoes dispatch of medium energy contract power plants on the base affect the revenue of other generators?
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Operation start-up of new installed capacity
Start-up of power plants whose daily price supply are usually lower than those they marginalize (which is equal to being dispatched on the base) do not show a spot price reduction, therefore generator revenue has not been affected
Source: Data from XM, our own preparation
Page 42
Possible Questions about the ProposalWhy Physical Dispatch?
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Physical dispatch
It ensures that dispatch power plants are the most competitive ones
These power plants have the lowest levelized cost of energy (LCOE)
It avoids distortions in price formation
International experience suggests physical dispatch
Financial dispatchIt is possible that contracts are awarded to those that have a more depreciated portfolio
Page 43
Possible Questions about the ProposalIs There a Need for an Additional or More Explicit Policy Signal to Implement This Mechanism?
Alternatives to Include Non-conventional Sources of Renewable Energy in the Colombian Energy Matrix
Whereby the basis for electric power public service provision and a competitive market in the Colombian electricity sector are provided
Law 142 and 143 of 1994
Whereby a general system was created to promote the Rational and Efficient Use of Energy and inclusion of alternative energies (URE)
Law 697 of 2001
Whereby the sales of energy generated by wind, biomass or agricultural resources are exempt from income tax for a 15-year term.
Law 788 of 2008
Law 1715 of 2014
Kyoto ProtocolMontreal Protocol
Law 629 and 688 of 2000
Advance towards sustainable or low-carbon growthProtect and assure sustainable use of the natural capital and improve environmental quality and governance
National development plan
2014-2018Whereby the goal is to promote the development and use of renewable energy sources and boost FERNC in the domestic energy market through various instruments
There are enough signs of policy to implement a regulatory framework that permits the participation of FNCER in competition with other technologies
Contact:
Dafna Siegert
Executive Director EY
Telephone number: +57 (1) 482-1035
Dafna.Siegert@co.ey.com
Mauricio Gómez Machado
Consultoría Regulatoria Partner
Telephone number: +57 (320) 489-9226
Mauricio.gomez@consultoriaregulatoria.com
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Consultoría Regulatoria
About Consultoría Regulatoria
Consultoría Regulatoria SAS is an investment bank specializing in the public service, energy and combustible gas sectors. Its main activities include providing consultation services to stakeholders in these sectors regarding legal and regulatory issues, allowing its clients to make informed decisions, with realistic impact estimations resulting from qualitative and quantitative analyses of legal and regulatory provisions in the aforementioned sectors.Its partners have over 25 years of experience in successfully structuring power generation infrastructure projects, mining, combustible gas, rural electrification, ESCOs, and others. Additionally, in the design of electricity and gas markets and establishing regulatory provisions to include non-conventional renewable energy in the energy matrices of countries like Argentina and Mexico.Consultoría Regulatoria is prominent for being the strategic partner of several companies in the sectors of its competence, supporting strategic decisions and assuming challenges posed by the legal and regulatory dynamics of its clients