OBG talks to Juan Esteban Calle, General Manager, Empresas Públicas de Medellín (EPM)

Interview: Juan Esteban Calle

Given that electricity demand is growing at 4% per year, how will future growth be met?

JUAN ESTEBAN CALLE: Over 95% of the population is already supplied with electricity, so future projects will primarily be used to meet increasing demand, including for the 5% not currently served and the installation of alternative energy sources for cost-benefit reasons. The constant rise in demand has benefitted the sector. Since regulation stipulates a cap of 25% for total energy generation and distribution market share per producer, more demand allows the market to expand. The most important ongoing generation project is Hidroituango, which will require a $6bn investment to achieve 2400 MW of capacity. EPM will finance this and similar projects with bonds, allowing pension funds and investors to participate directly in the development of electricity infrastructure. Along with a second project expected to produce 600 MW, the output of both facilities should meet demand until at least 2024.

How can foreign companies contribute to the development of electricity infrastructure?

CALLE: Foreign firms have been active in developing Colombia’s electricity infrastructure for the past 20 years. The Hidroituango project has the biggest participation to date of domestic infrastructure development by Colombian firms. Conconcreto and Coninsa together have a 45% stake in the project’s consortium, and Brazil’s Camargo Correa holds the rest. For financial and technical reasons, Colombian firms cannot handle projects that require such large investments without the support of foreign partners. Domestic consortia are gradually preparing to lead large projects, and they will be able to compete on their own in the medium term.

What effect will completion of the Ituango hydroelectric project have on hydropower capacity?

CALLE: Half of the dam’s potential will be tapped by 2018, which means an extra 1200 MW of installed power. Once this figure doubles to 2400 MW by 2024, we will have a hydropower surplus, for which there are two important applications. The first is increased energy exports. We already export surplus energy to Peru and Ecuador, and we want to broaden our export market to Central America, for which an interconnection with Panama is still pending. Making this interconnection would allow further exploitation of Colombia’s hydroelectric potential. The second application will be to feed energy intensive industries. The development of the port of Urabá, for example, will require the installation of an industrial area with a high volume of electricity consumption and power supply at competitive prices before it is able to provide the region with direct access to the sea by the end of the decade.

In what way can the use of renewables in Colombia’s energy sector be increased?

CALLE: Diversifying power generation is a necessity. Beyond the environmental benefits, it is important for Colombia to use its natural resources to shield against the effects of climate change and droughts resulting from above-average water temperatures in the Pacific, known as the natural phenomenon El Niño. Colombian regulation encourages investment in renewable energy, but so far there have only been pilot projects, so potential remains untapped. This justifies the strong interest in renewables demonstrated by major firms both in Colombia and throughout the region, particularly in wind energy. For example, EPM has a pilot wind farm in Guajira that currently produces 19.5 MW.

Colombia is already a regional leader in sustainable transportation, such as by using natural gas in mass transit systems. There has been increased interest in developing electricity stations, and electric buses are being incorporated into bus fleets in communities around the country. The marketing of electric vehicles for individuals is taking off, especially with motorcycles. Solar energy alternatives are also starting to attract interest, particularly for remote, rural populations where establishing electric connections is economically unviable.