Colombia's 2025 energy outlook: What investors need to know

Colombia's electric power sector is facing a raft of major challenges, not least the severe delays facing renewable energy projects and an ongoing dependence on hydroelectricity. 

According to grid operator and wholesale power market coordinator XM, solar capacity currently comprises around 2GW of installed capacity – less than 10% of Colombia's total – while there are still no grid-scale wind projects operating in the country. 

A major reason for the delays is the slow-pace of environmental licensing for the plants and their associated transmission lines. 

In Colombia, energy developers must hold individual consultations with all communities affected by their projects. In the case of Grupo Energía de Bogotá, this meant holding direct talks with more than 200 communities in its effort to secure an environmental license for its Colectora transmission line, which is running around four years behind schedule.

Licensing and other regulatory challenges have forced a number of developers to abandon or reconsider their future participation in renewable energy projects.

In December, EDP Renewables announced it would sell two large wind farms while Celsia, Enel Colombia and EDF have said they are considering offloading wind and solar assets.

Regulatory issues are also impacting existing power plant operators. Wind and solar generators are particularly concerned about recent changes that lowered maximum prices for energy sales in the spot market and placed new limits on how much electricity they can allocate to short-term contracts.

But it's not all bad news and despite the challenges and risks, there are opportunities for project developers.

The government announced a package of urgent transmission works last July, for which tenders are currently underway or will be launched in the coming months.

Colombia is also holding a bidding process for offshore wind projects, the winners of which are due to be announced in the second half of the year.

And power sector regulator Creg has announced plans for three reconfiguration auctions by the end of March as part of efforts to reinforce electricity supply. 

In addition, the sector is awaiting news about a possible bidding process for grid-scale energy storage in the second half of 2025.

Read more about the region's 2025 energy sector outlook here.