Creating local value: renewable energy auctions in Colombia

This research paper examines how Colombia can redesign its renewable energy auctions to foster a just energy transition by integrating socio-economic and community-driven objectives. It argues that previous price-based auctions led to project concentrations in resource-rich areas like La Guajira, causing social conflicts and delays. The authors propose two main pathways: enhancing benefit-sharing and community engagement for large-scale projects through multicriteria award mechanisms, and scaling up energy communities via a reserved auction quota (adhesion process) and a dedicated support agency.

• Colombia's initial renewable energy auctions, enabled by Decree 570 in 2018, focused primarily on price and technical factors, neglecting socio-economic considerations. This led to significant social acceptance challenges, resulting in project delays and cancellations, with local communities often turning to legal measures like 'tutelas' or direct actions such as blockades.
• 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 heightened tensions regarding land use, benefit sharing, and the legitimacy of consultation processes.
• The paper recommends that Colombia implement multicriteria award mechanisms that evaluate bidders on non-price indicators. Suggested criteria include revenue sharing (community benefit funds), shared ownership, local procurement, and skills and employment targets, such as prioritizing the retraining of coal industry workers in fossil-fuel producing regions.
• To improve large-scale project outcomes, the authors suggest strengthening auction qualification requirements. Bidders should be required to provide evidence of a comprehensive understanding of the local context, a community engagement strategy aligned with autonomous protocols for Free, Prior and Informed Consent (FPIC), and a transparent benefit-sharing program.
• To support energy communities (defined as associations with up to 5 MW capacity), the paper proposes an 'adhesion process'. This would involve reserving a small portion of auctioned demand as a community quota, allowing these smaller actors to access power purchase agreements at the auction-determined price within a fixed time window (e.g., three years) on a first-come-first-served basis.
• The authors propose the creation of a dedicated support agency for community-driven projects to prevent 'community washing'—where projects are labeled community-based but controlled by external sponsors. This agency would provide project-cycle support, including mentoring and financial assistance, going beyond the current roles of the Energy Communities Focalization and Administrative committees.

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} }