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Cablegate: Colombia: Information for Renewable Energy

VZCZCXYZ0001
PP RUEHWEB

DE RUEHBO #4086/01 3171716
ZNR UUUUU ZZH
P 121716Z NOV 08
FM AMEMBASSY BOGOTA
TO SECSTATE WASHDC PRIORITY 5545

UNCLAS BOGOTA 004086

SIPDIS

EEB/IFD/OIA FOR MCULLINANE; WHA/EPSC FOR FCORNIELLE;
OES/STC FOR TBURNS; STATE PASS TO OPIC

E.O. 12958: N/A
TAGS: ENRG EINV SENV PGOV OPIC CO
SUBJECT: COLOMBIA: INFORMATION FOR RENEWABLE ENERGY
INITIATIVES

REF: STATE 100170

1. SUMMARY: The following information on Colombia's energy
sector is provided in response to reftel request. Colombia
is working to expand its renewable energy output and offers
extensive opportunities for increased investment in wind,
solar, geothermal, biomass/biofuels, and hydroelectric
projects. In September, the United States and Colombia
signed a memorandum of understanding to advance bilateral
cooperation on renewable and clean energy, including
biofuels, which provides a framework for increased
cooperation. END SUMMARY.

Overview
--------

2. Despite a decline in domestic petroleum production since
the late 1990s, Colombia remains a net energy exporter and
expects to increase both traditional and renewable energy
output over the next decade. Colombia attracted over USD 3.3
billion in foreign direct investment to its energy sector in
2007. While most of the investment flowed to the oil, gas
and coal sectors, renewable energy offers promising
opportunities. Currently, Colombia has only 28.1 megawatts
(MW) of installed renewable energy capacity, excluding
hydropower, consisting mainly of wind power. Nevertheless,
Colombia has significant wind, geothermal, biofuels, and
solar resources that remain largely unexploited.

Wind Energy
-----------
3. Colombia has an estimated wind power potential of 21
gigawatts (GW) in the northern department of La Guajira,
which is home to class 7 winds (i.e. over 10 meters per
second). Only the Patagonia region of Chile and Argentina
offers that class of wind capacity elsewhere in Latin
America. At present, Colombia's installed wind capacity
totals only 19.5 MW or 0.4 percent of total wind potential.
The capacity is concentrated in the Jepirachi Wind Project,
developed by the Medellin Public Utility (EPM) company under
a carbon finance mechanism arranged by the World Bank.
However, several projects are under consideration, including
a potential 200 MW project in Ipapure.

Solar
-----

4. Colombia has significant solar capacity due to its
location near the equator. However, Andean climatic
conditions limit ideal collection areas. Average daily
radiation totals 4.5 kilowatt hours per square meter (kWh/m2)
with the highest averages (6 kWh/m2) registered in the
Guajira peninsula. Of the 6 MW of installed solar power in
Colombia, 57 percent is used in rural electrification
applications and the remainder in communications towers and
road signals.

Geothermal
----------

5. The Colombian Electric Power Institute (IPSE) has
identified three areas of Colombia with strong geothermal
power potential: near the Azufral volcano, Narino Department;
near the Chiles volcano, Narino Department; and Paipa, Boyaca
Department. While geothermal power is still only in the
exploratory stage, the U.S. Trade and Development Agency
(USTDA) has funded a USD 599,000 feasibility study to support
the development of a 50 MW geothermal power generation
project with Colombia's state-owned power generation company
ISAGEN.

Biomass/Biofuels
----------------

6. Colombia has significant biomass power generation
potential based on agricultural waste from large industries
including bananas, coffee, and livestock. The Colombian
government estimates potential capacity at 16 GW. The Uraba
region of Antioquia Department, with 19,000 hectares of
banana plantations producing more than 1 million tons of
biomass annually, as well as Colombia's coffee growing region
are the most promising areas for biomass-fueled electrical
generation.

7. The GOC has implemented an aggressive national biofuels
development plan. Colombia currently has five privately
owned ethanol plants and is scheduled to have six operational
private biodiesel plants by mid-2009. The GOC has
aggressively pursued biofuels as a means of reducing
pollution in major metropolitan areas, generating rural

employment alternatives to narcotics cultivation, and
diversifying its transportation fuel supply. Specifically,
the GOC has implemented a series of tax incentives and
blending mandates of renewable biodiesel (5 percent) and
ethanol (10 percent) into diesel and gasoline transportation
fuel supplies to support the industry. Although Colombia is
still working to meet the existing blending requirements, the
mandates are scheduled to rise to 20 percent by 2015, further
increasing biofuels demand. The GOC has also publicly pledged
to develop the industry without destruction of native
ecosystems through use of degraded or underutilized
agricultural lands already in production.

Hydroelectric
-------------

8. According to GOC figures, hydroelectric power currently
accounts for 78 percent of Colombia's electricity generation
(13,600 MW) with almost 3,000 MW of additional capacity under
construction through six new plants scheduled for completion
by 2018. The new plants, located in Tolima, Huila,
Antioquia, Caldas and Santander Departments, represent USD 5
billion in investment and will be built and operated by Grupo
Endesa (Spain), Union Fenosa (Spain), ISAGEN
(Colombia-Public/Private), and EPM (Colombia-Public). In
addition to supplying rising domestic demand with
emissions-neutral renewable hydroelectric power, Colombia
aims to sell excess capacity to regional neighbors including
Brazil. Colombia currently exports a small amount of
electricity to Ecuador.

9. The GOC estimates total large-scale hydroelectric
potential in Colombia to reach 93 GW with an additional 25 GW
of small-scale hydroelectric plant potential. However, the
potential for large hydropower faces challenges as the best
sites have been developed, increasing environmental and
social displacement concerns, and climate changes affecting
rainfall.

Memorandum of Understanding
---------------------------

10. On September 18, 2008, Secretary Rice signed a memorandum
of understanding with Colombian Foreign Minister Bermudez to
advance cooperation on renewable energy by promoting research
exchange, alternative development activities, investment in
clean energy, and the alignment of biofuels standards and
codes. To date, State Department and U.S. Department of
Agriculture funds have supported exchanges of experts on
sustainable biofuels development and Colombia has joined the
Global Bioenergy Partnership (GBEP) to share its experiences
in developing renewable energy.

Points of Contact
-----------------

11. Primary Embassy point of contact is Deputy Economic
Counselor William Popp (poppww@state.gov; tel:
011-571-383-2780). Back-up point of contact is Economic
Counselor Lawrence Gumbiner (gumbinerlj@state.gov; tel
011-571-383-2448)
BROWNFIELD

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