Photovoltaic Energy in Colombia
Colombia has huge potential for renewable energy. Solar irradiation levels in Colombia are among the highest on the planet, especially within the Caribbean Zone and the Orinoquia. Nevertheless, so far renewable energies contribute to less than 1 percent of national energy consumption.
However, as a result of Law 1715 of the 2014 constitution, which gives tax incentives to investments in renewable energy, alternative energy projects are finally developing in the country. Solar photovoltaic technologies, in particular, will be able to profit from the new and improved framework conditions.
National Carbon Tax
The National Carbon Tax was created by Article 221 of Law 1819 of 2016 (Structural Tax Reform) in response to the country's need for economic instruments to incentivize compliance with greenhouse gas (GHG) mitigation goals at the national level.
This tax is a levy based on the carbon content of fuels and is, since January 2017, paid by the related end-users as it is included in the current price of fuels.
In compliance with this law, the Ministry of Environment and Sustainable Development (MADS), issued Decree 926 of 2017, which originally established the procedure for the Non Causation of the National Carbon Tax. The purpose of this decree is to stimulate the formulation and implementation of mitigation initiatives through the reduction or removal of GHG emissions, which are entitled to the Non Causation of the tax.
Photovoltaic (PV) energy can be used to replace conventional energy, thus contributing to greenhouse gas (GHG) mitigation in Colombia. Projects eligible to apply to this initiative must do the following: guarantee transparency in its implementation, demonstrate a reliable methodological development, publicly register the related mitigation results, as well as the ownership of the emission reductions or GHG removals generated. Finally, they must be verified by an accredited third party.
For this purpose, Decree 926 of 2017 establishes the characteristics of GHG emission reductions and removals. It specifies that these must derive from mitigation initiatives implemented in the national territory, use certification programs or carbon standards that have public registries and have implemented methodologies of the Clean Development Mechanism (CDM) of the United Nations Framework Convention on Climate Change (UNFCCC). They may also follow methodologies issued by the national government through the National Standardization Agency or comply with the methodological steps established in the REDD+ registry.
Verification of the tonnes of carbon eligible for the neutralization of emissions associated with the use of fossil fuels taxed by this law must be conducted by authorized verification agencies. However, due to the decentralized and dispersed nature of PV, the costs associated with development, registration, monitoring and verification (called transaction costs) present significant obstacles to access these mechanisms and their corresponding benefits for individual PV plant .
Incentive Program for Renewable
Energy Plants in Colombia
Bonos Solares SAS is the Colombian subsidiary of First Climate, which has main offices in Frankfurt, Germany and Zurich, Switzerland.
In order to make the advantages of a greenhouse gas (GHG) mitigation initiative accessible, Bonos Solares SAS has created the “Renewable Energy Incentive Program - Programa de Incentivos para Energía Renovable”.
The Climate Bonus “Los Bonos Climáticos” will be paid to renewable energy plants enrolled in the Program each October of the year following the year in which GHGs have been reduced. For example: The Climate Bonus or the year 2023 will be paid in the fourth quarter of 2024.
Main conditions for access to the Renewable Energy Incentive Program:
Main Eligibility Criteria (Non-exhaustive)
Plant Location
Colombia National Territory
Investment start date
After October 17th 2017
Electricity Generation
Transfer of GHG emission reductions
Plants < 15 MW (inverter output)
Inverter output measurement (AC current) and telemetric transfer
Transfer to Solar Bonus Program
Registration*1 without cost and guaranteed inclusion*2
Plants > 15 MW (inverter output)
Registration*1 without cost and guaranteed inclusion*2
1 Registration is the contract between the plant owner and the Renewable Energy Incentive Program.
2 Inclusion refers to the registration of the plant with the Board of Directors of the COLCX carbon standard.
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Fiscal and Financial Benefits
Registered under COLCX
Registered No: 01-0031 COLCX
Bonos Solares SAS
Authorized by the Colombian Government as the Coordinating and Management Entity (CME)
Optimized Emission Reductions
Through a high grid emission factor
Solar Bonus
Attractive compensation based on plant size (#CER)*3
Climate Bonus validity
During 21 years*4
Inflation adjustment
According to the inflation of the previous year plus a percentage point from year 2021 onwards
Fiscal Benefit (only for generating companies that sell the photovoltaic energy generated)
Article 99 of Law 1819 of 2016 adds article 235-2 to the Tax Statute, which refers to exempt income from taxable year 2019*5.
3 – CER = Certified Emission Reduction is a unit according to the Kyoto Protocol, or a unit which replaces the CER according to the Paris Agreement. 1 CER = 1 t CO2 equivalent.
4 – Validity is valid as long as there are no significant changes in the regulatory framework established by the Kyoto Protocol, the Paris Agreement and Colombia´s Tax Statute.
5 – Benefits are established for the sale of electricity generated based on wind, biomass or agricultural, solar, geothermal or the seas, according to the definitions of Law 1715 of 2014 and Decree 2755 of 2003, for a term of 15 years when it is carried out only by generating companies and the following requirements are met: Process, obtain and sell carbon dioxide emission certificates according to the Kyoto Protcol, that at least 50% of the resources obtained from the sale of said certificates be invested in social benefit works in the region where the generator operates. Such investment will be made in accordance with the impact proportion of each municipality due to the development and operation of the utility.
Remote Monitoring Co-Benefits
The plants participating in the Bonos Solares Program will receive the remote monitoring of their plant as a co-benefit. In the event that the monthly solar generation is less than 90% of the nominal generation established, the plant owner will automatically receive a warning email.
Program Participants (References)
Company
Project
Location Country: Colombia
Technology
Installed
Capacity
Electricity Generation/year
Canadian Solar
Caracolí
Malambo, Atlántico
Photovoltaic
52,4MWp
109873 MWh
Sol de Inírida
Sol de Inírida
Puerto Inírida,
Guainía
Photovoltaic
2,25 MW
3000 MWh
SVC
Alma Solar I
Arauca, Arauca
Photovoltaic
9,9MWp
23261 MWh
For more information and registration into the Renewable Energy Incentive Program - Programa de Incentivos para Energía Renovable
Please contact:
Nelson Alcantar
First Climate Markets AG
Celular: +57 316 534 6224
nelson.alcantar@firstclimate.com
Alpidio Godoy Ardila
URE INGENIERIA LTDA.
Tel: +57 1 474 3405, +57 1 601 1375
Celular: 317 647 9374
gerencia@ureingenieria.com
URE INGENIERIA LTDA.
Calle 118 N° 19-52 Of. 204
Bogotá D.C. Colombia.