In Energy

Latin America is slowly moving towards its net zero goals, with many heavy industries, investors and national oil companies resisting the transition towards green energy. Colombia was a late adopter of renewable energy, but AMI’s market-research shows that its energy sector is ripe for disruption:

  • Green hydrogen – Despite the slew of tax incentives, ambitious targets and multi-million-dollar investments by big industry players, the only realistic green hydrogen projects in the near-term are those that replace gray hydrogen in oil refining, chemical production, and fertilizer manufacturing. Moreover, Ecopetrol’s desire to monetize its gas reserves to create blue hydrogen will need to overcome the country’s declining gas reserves and inadequate carbon capture technology that fails to capture more than 25% of CO2 emissions. This is aggravated by methane leaks during production, making blue hydrogen more environmentally impactful than burning natural gas for heat. Hence, blue hydrogen is not yet clean or practical enough.
  • Offshore wind – At the end of 2021, nearly 3.5 GW in renewable energy had been contracted in Colombia, but only 151 MW was installed and operating (less than 1%). Although some of these projects don’t have a start date until the middle of the decade, renewable energy investors and operators are experiencing a disconnect between supply and demand caused by insufficient high voltage transmission lines, challenges with connection points, and bureaucratic environmental permitting. Major obstacles are also present in the development of onshore wind plants in La Guajira, due to the opposition of the Wayuu indigenous communities. Newly elected Gustavo Petro has vowed to resolve those issues, but similar approaches in neighboring countries have been unsuccessful. Offshore wind will sidestep the local community opposition related to land disputes, even though it will still struggle with the lack of transmission infrastructure in Colombia’s Caribbean region, environmental concerns, and high O&M costs. Colombia’s potential offshore wind capacity is 37 GW, more than double its total energy matrix.[1]

We go into much greater detail about Colombia’s energy sector investment opportunities and risks in our new whitepaper, “The Road to Net Zero in Latin America”, which you can find here.

Free Report: The Road to Net Zero in Latin America

FREE REPORT

The Road to Net Zero in Latin America

How investors, energy companies and suppliers can maximize opportunities while avoiding pitfalls in the region's top 6 markets


[1] “Colombia unveils rules for geothermal energy projects.” BN Americas, 20 August 2021.


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