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Expanding electricity generation: the new Colombian model
Dr Fernando Barrera, Associate Director in our Madrid office, addressed the Colombian Electricity Annual Conference on the recently created reliability auctions. The auctions aim to encourage investment in generation by paying generators a premium (the reliability payment) on the market price. The payment set in the auction is an option premium (US$/MWh) and the winners commit to provide generation resources when the market price is above the strike price set by the regulator. Generators pay the price difference between the market price and the strike price in return for the reliability payment.The new charge has been welcomed by investors and has attracted over 4,000 MW of capacity in the May and June 2008 auctions that ensures enough generation to cover market demand until the year 2019. Fernando's presentation analyses the reliability requirement and identifies a number of reforms that may improve its cost efficiency and market performance.
 Frontier presentation-Cargo por Confiabilidad Colombia.pdf |
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