Colombia Power Report Q3 2013 - New Market Report

Developments in Colombia's electricity market this quarter continue to centre around hydropower. Isagen announced that its Amoya hydroelectric power plant has begun operations, and work is at an advanced stage in the 820MW Sogamosa hydro project. Both will help boost domestic electricitygenerating capacity, but neither will help resolve the fundamental weakness in Colombia's electricity sector: its overreliance on this type of power generation. Even with this increased capacity, Colombia remains vulnerable to drought, and the risk of this reduces income from power export agreements or even power outages in dry years.

Hydroelectric power continues to contribute to 80% of total consumption in Colombia, despite the inherent problems associated with this source of energy. This overdependence is even more acute in years of low rainfall. The sector faces other setbacks, such as protests at construction sites and a risk of attack in zones that the FARC guerrillas consider to be their own.

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During the period 2013-2017, BMI forecasts that Colombia's overall power generation will increase by an annual average of 3.6%, reaching 71.6 terawatt hours (TWh). Driving this growth are annual gains of 4.0% in hydroelectric power generation, while coal and gas-fired generation are forecast to increase by an annual average of 1.8% and 2.4% respectively.

Following an estimated rise in real GDP of 4.4% in 2012, BMI expects average annual growth of 4.6% between 2013 and 2022. Net power consumption looks set to increase to 60.9TWh by 2017, rising to 74.6TWh by 2022. The theoretical net export capacity by 2017 is 0.23TWh, and Colombia's export capacity will increase to 0.90TWh by 2022.

Key developments in Colombia's power sector this quarter:

* After months of speculation, in March 2013 Panama's government announced that it was abandoning the project for an electric interconnection line between Panama and Colombia, because of a lack of financial resources. Colombia's ISA responded by announcing plans to 'redefine' the project to ensure its viability.
* Isagen's 80MW hydroelectric project on the Amoya river began operations in May 2013.
* Empresa de Energia de Bogota announced in April 2013 that it had been awarded a contract by Colombia's mining and energy planning unit UPME for work on two substations and an associated 160km dual circuit transmission line.

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