Distributed renewable energy in Colombia: Unlocking private investment for non-interconnected zones

Lylah Davies; Deger Saygin

doi:https://doi.org/10.1787/deda64ff-en

OECD Environment Working Papers

This series is designed to make available to a wider readership selected studies on environmental issues prepared for use within the OECD. Authorship is usually collective, but principal authors are named. The papers are generally available only in their original language English or French with a summary in the other if available.

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ISSN: 19970900 (online)
https://doi.org/10.1787/19970900

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Distributed renewable energy in Colombia

Unlocking private investment for non-interconnected zones

Colombia has prioritised the use of renewable energy to expand and improve electricity services for its population in zones non-interconnected to the national grid. Recent policies and regulations have supported this ambition with successive measures to strengthen investment conditions for distributed renewable energy, like standalone solar photovoltaic (PV) solutions and hybrid solar PV mini-grids. Still, the distributed renewable energy market in non-interconnected zones is relatively immature, reflected by the high costs for connecting new users. New business and financing models will be critical to bringing down the cost of renewable energy technologies, accessing private equity and debt in larger volumes, and ultimately progressing towards replacing existing inefficient and polluting diesel generation systems. Building on international experiences, this paper discusses approaches to strengthening investment conditions, looking at support mechanisms and de-risking instruments used elsewhere, which can help bridge the financing gap in Colombia.

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English Also available in: Spanish

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Keywords: Blended Finance, Energy Access, Rural Electrification, Finance and Investment, Renewable Energy, Distributed Energy Sources

JEL: Q40: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Energy / Energy: General; G20: Financial Economics / Financial Institutions and Services / Financial Institutions and Services: General; Q52: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Pollution Control Adoption and Costs; Distributional Effects; Employment Effects; Q56: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth; Q48: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Energy / Energy: Government Policy; Q42: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Energy / Alternative Energy Sources; H71: Public Economics / State and Local Government; Intergovernmental Relations / State and Local Taxation, Subsidies, and Revenue; H32: Public Economics / Fiscal Policies and Behavior of Economic Agents / Fiscal Policies and Behavior of Economic Agents: Firm; H54: Public Economics / National Government Expenditures and Related Policies / National Government Expenditures and Related Policies: Infrastructures; Other Public Investment and Capital Stock

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