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Reliability Charge Colombia, an investment oportunity

Reliability Charge Colombia, an investment oportunity. Paris, Octuber 15-16th, 2007. Content. Colombian Electric Sector. An investment oportunity in the Colombian power market. How to participate. Rights and Obligations. Schedule. Capacidad instalada (MW). Plantas hidráulicas.

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Reliability Charge Colombia, an investment oportunity

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  1. Reliability ChargeColombia, an investment oportunity Paris, Octuber 15-16th, 2007

  2. Content • Colombian Electric Sector • An investment oportunity in the Colombian power market • How to participate • Rights and Obligations • Schedule

  3. Capacidad instalada (MW) Plantas hidráulicas 8.532,0 Plantas térmicas 4352,66 Plantas menores 427,4 Cogeneradores 19,5 Total 13.331,5 MW Interconexiones internacionales Ecuador Importación 215,0 MW Exportación 285,0 MW Venezuela Importación 205,0 MW Exportación 336,0 MW Embalses Volumen máximo 16.339,5 GWh Sistema de transmisión 110-115 kV 6.125,3 Millas 138 kV 9,6 Millas 220-230 kV 6.665,2 Millas 500 kV 900,8 Millas Demanda de energía eléctrica, 2006 Demanda 50.815 GWh Crecimiento 4,07% Demanda máxima de potencia 8762 MW Colombian Electric Sector

  4. Colombian Power Market data (2006) Generation 36 Transmission 11 Distribution 32 Retailing 67 Wholesale Energy Market Agents Generation 12 years of operation Generators and retailers Centralized transactions 13.280 MW installed (64% hydro 33% thermal) Peak demand: 8762 MW (Growth: 1.42%) Energy demand: 50.815 GWh (Growth: 4.07%) Firm energy (declared by suppliers): 60,6 TWh-year

  5. Spot and bilateral prices Bolsa Contratos bilaterales Servicios Complementarios

  6. Spot market Bilateral contracts Ancilliary services Capacity Charge Transactions in the wholesale energy market (2006) $ 537.76 18.44% $ 1 653.61 56.71% $ 175.78 6.03% $ 549.00 18.83% $ 2 916.16 mlls

  7. What is the oportunity? Delivery of energy in scarcity conditions Firm Energy Obligation -FEO Reliability Charge Constant payment ($/GWh) of Firm Energy Commitment period: up to 20 years Building and operation of power assets Firm Energy Auction to allocate FEO

  8. When? Supply-Demand Balance

  9. How to participate? 1. To Inscribe a project of power generation in Colombia • Requirements for the Inscription • Feasibility studies • Financial and management scheme • Approval of Environmental Alternatives Diagnosis • Information about land acquisition options • Request of conection to the transport network • Fuel acquisition scheme • Designs in execution • Presentation of environmental alternatives Studies • Information about power generation projects in Colombia • upme.gov.co www.upme.gov.co

  10. 2. To bid in the Firm Energy Auction US$/MWh Aggregated supply D 26.8 = P0 excess supply Starting price Round 1 P1 Round 2 P2 P3 Round 3 P4 Round 4 P5 Round 5 13.4 = P6 Clearing price = CXC 13.00 = P6’ D MWh How to participate? 3. To build and operate the generation asset

  11. Energy to be auctioned and commitment period GWh Energy to be auctioned Demand Commitment up to 20 years Transition Period 2007 … 2011 2012 2013 2014 2015 2016 ........ 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 years

  12. Generator: Obligations and Rights • To have a generation asset to back the FEO • To have the fuel to generate • Deliver the energy when Spot > Scarcity prices as dispatch required it Obligations Rights • To receive the Reliability Charge, even if the FEO is not required, during the commitment period. • FEO protected by Colombian Laws and Regulation Spot price FEO is required

  13. Demand: Obligations and Rights Obligations Rights • To pay the reliability charge during • the commitment period, even if the • FEO is not required. • To buy the energy up to • the Scarcity Price when • Spot Price>Scarcity Price

  14. Legal Stability of CXC • Electricity Law inforce to evaluate reliability each plant gives to SIN • This regime is part of code of Wholesale Energy Market (MEM). • CXC is one of transactions of the MEM • The Firm Energy Commitment (OEF) is a legal relation as a result of the acution with well defined rigths and obligations • CREG has defined integrally the regime of the transaction: Assignation of OEF, duration, responsability, risks, guarantees, settlement, billing and payment. • There is a legal stability clause • Each agent will be certify by ASIC for a legal stability of the transaction.

  15. Guarantees • Entrance before commissioning period • Fuel availability • Declaration of firm energy higher than Base Firm Energy • Declaration of higher firm energy due to IHF improvements • Payment of commission to remunerate a succesful auction promotion.

  16. Secondary Market Demand Response Last resource generator Reconfiguration Auctions Security Rings

  17. Incentives • Fixed CXC incomes • Up to 20 years for new plants • Up to 10 years for Closing Ciclo and Under cosntruction • Up to 5 for minor repowering in transition • Alternatives for ensuring fuelContract or guaranties • Legal stability. • Improvment of availability.

  18. Schedule • 2007 • Transition period assignment 2008, 2011, 2012 • 2008 • 2013 Firm Energy Auction • 2009 Firm Energy Assignment

  19. Comisión de Regulación de Energía y Gas creg@creg.gov.co www.creg.gov.co

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