Analysis of the Energy Sector in Colombia
Fabricio Sierra
![Fabricio Sierra]()
Fabricio Sierra
Development & Exploration Geoscientist | EOR & IOR | Energy Consultant | Former Asset Manager | Former Slb, Repsol | @fabriciosierra on X | Text +593 99-275-5093
COLOMBIA’S ENERGY MIX: TRADITION MEETS TRANSITION
Colombia’s energy sector is rooted in a diverse generation portfolio, primarily dominated by hydropower, which accounts for approximately 65% of the electricity generation. Natural gas, coal, and oil supply the remainder, making up 20% of the national energy mix, with a focus on thermal generation in regions less endowed with water resources.
With the country’s target of reaching 70% renewable energy by 2030, the government is pushing forward with ambitious policies to expand solar, wind, and geothermal power. Currently, renewables (excluding hydropower) represent less than 5% of Colombia’s energy production, but significant growth is expected in the upcoming years, driven by policy incentives and international investment. This shift will reduce reliance on fossil fuels and enhance energy security, which remains crucial as Colombia seeks to meet rising electricity demand, which is projected to grow by 20% by 2030.
TARIFFS AND COSTS: BRIDGING ECONOMIC DISPARITIES
Electricity tariffs in Colombia are structured under a tiered scheme, with higher-income users paying more to subsidize lower-income households. On average, Colombian consumers pay about $0.11 per kWh, with rural areas often facing challenges due to inadequate infrastructure, resulting in higher delivery costs.
However, as renewable energy projects expand and are integrated into the grid, production costs could decline significantly. For example, solar energy, which cost around $50/MWh in 2020, is expected to fall to $30/MWh by 2030, helping Colombia to not only decrease the cost burden on consumers but also transition to cleaner energy sources.
GRID MODERNIZATION AND ENERGY FLEXIBILITY
Colombia’s power grid, while robust in major urban areas, faces challenges in rural and remote regions, particularly in the Amazon and Pacific coasts. Modernizing the grid to integrate more renewable energy sources is a priority, as intermittent energy from solar and wind will require significant improvements in transmission infrastructure. The country is already investing in smart grid technologies and battery storage systems, expected to boost energy flexibility and stability.
Hydrogen is also gaining momentum, with the government launching pilot projects for hydrogen infrastructure, aiming for hydrogen to account for 5% of total energy production by 2030. This would position Colombia as a key player in Latin America’s hydrogen economy, complementing its natural gas sector.
FOSSIL FUELS AND CARBON CAPTURE: COLOMBIA’S DUAL APPROACH
Despite the push for renewables, fossil fuels remain an essential part of Colombia’s energy landscape. The country is the fourth-largest coal exporter globally, and coal-fired power plants contribute significantly to the energy mix. However, Colombia has committed to reducing its carbon emissions by 51% by 2030. To achieve this, it is ramping up investments in Carbon Capture and Storage (CCS) technologies, especially in oil and gas fields. This will allow the country to continue fossil fuel production while minimizing its carbon footprint.
In tandem, Colombia’s liquefied natural gas (LNG) exports are expected to increase, as demand for cleaner-burning fuels grows regionally and internationally. LNG supply has risen by 15% in the last five years, and the country plans to expand export terminals to maintain this trajectory.
BALANCING TRADITION AND INNOVATION FOR COLOMBIA’S ENERGY FUTURE
Colombia is at a pivotal moment in its energy journey. As the country continues to rely on its vast hydropower and fossil fuel resources, it is also laying the groundwork for a future powered by renewable energy, hydrogen, and enhanced carbon capture measures. By modernizing its grid, investing in clean energy, and developing new technologies like CCS and hydrogen, Colombia aims to lead the region in sustainable energy production by 2030.
The energy transition will not only strengthen Colombia’s economy but also enable the country to meet its climate commitments, providing a model for other developing nations facing the challenge of balancing traditional energy production with the need for a cleaner, greener fu
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