Creating local value: renewable energy auctions in Colombia

The paper argues that Colombia's previous price-based renewable energy auctions failed to consider socio-economic factors, leading to social conflict and project cancellations, particularly in La Guajira. It recommends two main pathways for the new framework: enhancing community engagement and benefit sharing for large-scale projects through stricter qualification requirements and multicriteria award mechanisms, and scaling up energy communities via a reserved auction quota (adhesion process) and a dedicated support agency to prevent 'community washing'.

• Colombia's previous renewable energy auctions focused exclusively on price and technical factors, neglecting socio-economic considerations. This led to social acceptance challenges, project delays, and cancellations, as local community interests were underrepresented compared to government and corporate priorities.
• Renewable energy projects in Colombia have been heavily concentrated in resource-rich areas, specifically La Guajira, which accounts for approximately 90% of winning projects and 60% of auctioned energy demand. This concentration has increased tensions over land use, benefit sharing, and the legitimacy of consultation processes.
• To improve large-scale project outcomes, the paper recommends that auction qualification requirements mandate evidence of a comprehensive local context understanding, a project life cycle community engagement strategy, and a transparent benefit-sharing program aligned with community 'Life Plans'.
• The authors propose moving from price-only awards to multicriteria award mechanisms. These would use non-price indicators—such as revenue sharing, local co-ownership, and employment of local ethnic groups or women—to select projects that align with broader policy goals.
• To support energy communities (projects up to 5 MW), the paper suggests an 'adhesion process' where a small portion of auctioned demand is reserved as a community quota. This would allow community-driven projects to access power purchase agreements at the auction-determined price within a fixed time window (e.g., three years) without competing directly with large utilities.
• The paper recommends establishing a dedicated support agency for community-driven projects to provide mentoring, financial assistance, and partnership facilitation. This is intended to prevent 'community washing', where projects are labeled as community-based to gain benefits while decision-making remains with external sponsors.

APA

Vega-Araújo, J., & Cabré, M. M. (2025). Creating local value: renewable energy auctions in Colombia. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2025/05/renewable-energy-auctions-colombia-sei2025-027.pdf

Chicago

Vega-Araújo, José, and Miquel Muñoz Cabré. Creating local value: renewable energy auctions in Colombia. Stockholm Environment Institute, 2025. https://www.sei.org/wp-content/uploads/2025/05/renewable-energy-auctions-colombia-sei2025-027.pdf.

Wikipedia

{{cite report |last1=Vega-Araújo |first1=José |last2=Cabré |first2=Miquel Muñoz |title=Creating local value: renewable energy auctions in Colombia |publisher=Stockholm Environment Institute |date=May 2025 |url=https://www.sei.org/wp-content/uploads/2025/05/renewable-energy-auctions-colombia-sei2025-027.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vegaarajo2025creating, author = {Vega-Araújo, José and Cabré, Miquel Muñoz}, title = {{Creating local value: renewable energy auctions in Colombia}}, institution = {Stockholm Environment Institute}, year = {2025}, month = may, url = {https://www.sei.org/wp-content/uploads/2025/05/renewable-energy-auctions-colombia-sei2025-027.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }