In recent years, Colombia has witnessed a surge in the development of renewable energy projects, particularly in the solar energy sector. The country's commitment to this energy source is driven by a strategic plan to diversify its energy mix, which has historically relied heavily on hydroelectric power. As climate change and fluctuations in weather patterns pose increasing challenges, the Colombian government has made key decisions to strengthen its capacity to generate clean, sustainable, and long-term energy.
Emerging as a response to high dependence on hydropower and aligned with policies aimed at positioning the country as a global biodiversity powerhouse, Colombia has implemented a modern regulatory, institutional, and market framework. This framework seeks to diversify the energy mix by expanding the installed capacity of non-conventional renewable energy sources, aiming to reduce emissions by 51% by 2030 and achieve carbon neutrality by 2050.
Exponential Growth of Solar Energy in Colombia
According to figures from the Ministry of Mines and Energy, Colombia has significantly increased its installed solar energy capacity in the last five years. In 2018, the country had a mere 25 MW (megawatts) of installed solar capacity. By the end of 2023, this figure had risen to over 600 MW, reflecting exponential growth in the development of solar projects nationwide.
A significant milestone was the renewable energy auction held in 2019, which resulted in the allocation of contracts to solar and wind energy projects with a total capacity of 2,200 MW. Of this capacity, it is estimated that over 50% corresponds to solar energy projects. With these initiatives, it is expected that the share of non-conventional renewable energy in Colombia's energy mix will increase from the current 2% to over 12% by 2026.
Source from https://www.mordorintelligence.com/
Significant Investments and Future Projections
Colombia has attracted significant investments in the solar energy sector. Between 2020 and 2023, approximately $1.5 billion was invested in solar projects. These projects are distributed across various regions of the country, with a particular focus on areas with high solar potential such as La Guajira, Valle del Cauca, and the Caribbean region.
Furthermore, for 2024 and 2025, Colombia is projected to continue expanding its installed solar energy capacity, with plans to reach 2,500 MW. The government's ultimate goal is to achieve carbon neutrality by 2050, and solar energy plays a crucial role in this commitment.
Economic Impact and Job Creation
The development of solar energy projects not only contributes to the energy transition but also has a positive impact on the local economy. According to data from the Colombian Association of Energy Generators (Acolgen), the implementation of solar projects in the country has generated more than 10,000 direct and indirect jobs since 2018. These jobs are concentrated in areas such as solar plant construction, panel installation, equipment maintenance, and specialized engineering.
The increase in these projects has also incentivized the development of infrastructure in more remote regions of the country, helping to reduce regional disparities. It is estimated that investment in solar energy could generate up to 15,000 additional jobs in the next five years, further boosting Colombia's economic growth.
Incentives to Facilitate the Development of Renewable Energy Projects in Colombia.
The development of renewable energy in Colombia is supported by incentives such as: (i) a 50% income tax deduction for 15 years on investments in alternative sources; (ii) exemption from customs duties and VAT for the importation of equipment for the development of generation projects; and (iii) the automatic exclusion of VAT on the acquisition of solar panels and equipment for solar generation. The scope of each incentive is further detailed below:
Customs Benefits: Exemption from import duties granted to machinery, equipment, materials, and supplies, exclusively destined for pre-investment and investment activities, when it comes to new investments in non-conventional renewable energy (NCRE) projects.
VAT Exclusion: The value-added tax (VAT) is excluded for the importation and acquisition of equipment, elements, machinery, and the acquisition of national or imported services destined for pre-investment and investment, for the production and use of NCRE energy, as well as those destined for the measurement and evaluation of potential resources. For this purpose, the UPME must certify the equipment and services excluded from the tax.
Accelerated Depreciation of Assets: Taxpayers generating energy from NCRE may request accelerated depreciation of equipment and civil works necessary for the pre-investment, investment, and operation of NCRE generation, acquired and/or constructed exclusively for such purpose. The annual depreciation shall not exceed 20%, as a global annual rate that may be varied annually by the project owner, by notifying the DIAN before the expiration of their sworn statement, without exceeding 20%, unless the law authorizes higher global percentages.
The Crucial Role of Logistics Services in Solar Projects
Logistics is a fundamental aspect of the successful implementation of solar energy projects, playing a key role in all phases of these developments, from the transportation of materials to the installation and maintenance of solar plants.
To build solar plants, it is necessary to mobilize large volumes of equipment such as photovoltaic panels, inverters, and support structures from manufacturing points to installation areas, which are often located in remote regions of the country. According to logistics sector reports, the transportation of solar panels requires specialized solutions due to their fragility, dimensions, and volume. Each panel can weigh an average of 18 to 25 kg, and thousands of them are needed for large-scale projects.
In addition, logistics companies are also responsible for transporting other crucial components such as batteries and transformers. In Colombia, logistics companies have developed specific routes and specialized protocols to ensure the efficient and safe delivery of this equipment. In fact, logistics represents between 10% and 15% of the total cost of a solar project, highlighting its importance in the economic viability of these projects.
The logistics sector has also been key to overcoming the geographical challenges presented by Colombia, such as the lack of infrastructure in some regions where solar plants are being built. Roads are not always in optimal condition, and the distance from ports to installation sites can be considerable, forcing logistics companies to innovate and adapt constantly to meet delivery times and avoid delays that could affect project timelines.
Roldán Project Division adds value to renewable energy projects in Colombia by providing seamless logistics solutions. Our expertise in handling specialized equipment and navigating challenging terrains ensures timely delivery and project success.
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