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New Regulatory Scheme to Guarantee
Power Reliability
Colombia, an investment oportunity
Santo Domingo, March 14-15, 2007
Content
2. How to participate
3. Rights and Obligations
4. Schedule
1. An investment oportunity in the Colombian power market
Delivery of energy in scarcity conditions
Building and operation of power assets
Constant payment ($/GWh) of Firm EnergyCommitment period: up
to 20 years
Firm Energy Auction to allocate FEO
What is the oportunity?
Colombian Power Market data (2006)
Generation
36
Transmission
11
Distribution 32
Retailing
67
13.280 MW installed
(64% hydro 33% thermal)
Peak demand: 8762 MW
(Growth: 1.42%)
Energy demand: 50.815 GWh
(Growth: 4.07%)
Firm energy (declared by
suppliers): 60,6 TWh-year
Ten years of operation
Generators and retailers
Centralized transactions
Transactions in the wholesale energy market (2006)
$ 537.76 18.44%
$ 549.00 18.83%
$ 175.78 6.03%
$ 1 653.61 56.71%
$ 2 916.16 mlls
REPUBLICA DE COLOMBIA MINISTERIO DE MINAS Y ENERGIA
UNIDAD DE PLANEACION MINERO-ENERGETICA
How to participate?
1. To Inscribe a project of power generation in Colombia
Requirements for the Inscription
Feasibility studiesFinancial and management schemeApproval of Environmental Alternatives DiagnosisInformation about land acquisition optionsRequest of conection to the transport networkFuel acquisition schemeDesigns in execution Request of environmental licence
Information about power generation projects in Colombiaupme.gov.co
www.upme.gov.co
How to participate?
3. To build and operate the generation asset
2. To bid in the Firm Energy Auction
P2
P3
Round 5
Round 4P4
P5
13.4 = P6
Round 3
Round 2
P1 Round 1excess supply
13.00 = P6’
Aggregated supply
Clearing price = CXCD
DUS$/MWh
26.8 = P0
MWh
Starting price
Energy to be auctioned and commitment period
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ........ 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038
GWh
Demand
Transition Period
Energy to be auctioned
years
Commitment up to 20 years
Construction period longer than 3 years
0 1 2 3
4 5
GWh
years
Commitment up to 20 years< 50% growth
Take price of auction of year 0
6 7Auction
0 1 2 3 4 5 6
GWh
years
Commitment up to 20 years< 60% growth
Take price of auction of year 1
6 7
Auction
Construction period longer than 3 years
0 1 2 3 4 5 6
GWh
years
Commitment up to 20 years< 80% growth
Take price of auction of year 2
6 7
Auction
Construction period longer than 3 years
0 1 2 3 4 5 6
GWh
years
6 7
Auction
Construction period longer than 3 years
0 1 2 3 4 5 6
GWh
years
Bid for the rest of firm energy
Commitment up to 20 years
6 7
Auction
Construction period longer than 3 years
Generator: Obligations and Rights
1. To have a generation assed to back the FEO
2. To have the fuel to generate
3. Deliver the energy when Spot > Scarcity prices as dispatch required it
Obligations Rights
1. To receive the Reliability Charge, even if the FEO is not required, during the commitment period.
2. FEO protected by Colombian Laws and Regulation
Spot price
FEO is required
Demand: Obligations and Rights
Obligations Rights
To pay the reliability charge during the commitment period, even if the FEO is not required.
To buy the energy up to the Scarcity Price when Spot Price>Scarcity Price
Reconfiguration Auctions
Security Rings
Secondary Market
Demand Response
Last resource generator
Schedule
• March 2007
– Information of Combined Cicles and Repower Projects.
• April 2007
– Demand forecast– Definition about the date of first Firm
Energy Auction.
