The solar sector’s attractions in Colombia

February 4, 2025

Felipe Camargo, CEO of GreenYellow Energy Colombia, talks to The Energy Year about the attractiveness of the solar sector for investors in Colombia and the company’s key projects and growth expectations. GreenYellow is a renewable energy company with expertise in developing solar PV, efficiency and electric mobility projects.

How attractive is the solar sector for investors in Colombia?
Colombia is a very attractive market for international investors because we have an array of tax incentives in the country that contribute to increasing the profitability of projects. In addition, there is plenty of land available on which solar plants can be built.
The greatest contributor to the country’s energy mix is hydropower. Hydro and solar complement each other very well because we have rainy seasons and dry seasons. This drastically influences the spot price of the energy because when water is scarce, energy prices go up, as is happening right now. Colombia is a country with both a need and a strong potential for the generation of solar energy, and that’s why we’re here.

In what ways are you capitalising on the solar opportunities Colombia offers?
We focus our solar strategy on two niche markets. The first one is small utility-scale, which refers to plants below 10 MW that are connected to the grid. The development of small plants requires less paperwork and fewer licences from the federal government, so it’s easier to put them through the pipeline and have more visibility on where these assets are going to return profits to the company.
The second one is self-generation projects, which are very attractive here in Colombia. It’s a great business because one proves that helping the environment and saving money at the same time is possible. There are six tax components within the energy tariffs: generation, transmission, distribution, commercialisation, losses of the grid and curtailment of the network. When you self-generate your energy, you only pay for the generation, saving money and energy consumption.

 

What are the most important projects that you’ve developed over the last 12-15 months?
The last 15 months have been a game-changer for us. Two or three years ago we had around 15 MW of capacity installed. Today, we have 120 MW installed in the country. We have accelerated our strategy for expanding our small utility-scale projects.
We have also been able to reach new markets for self-generation that provide opportunities with larger capacities. For example, Ocensa launched a bidding process for a 14-MW peak self-generation solar asset divided into sites in Coveñas and Vasconia. We won that competitive bidding process, and we are connecting these plants.
Our most recent grid-connected project that reached its commercial operations date (COD) is Parque Solar Alejandría, with a 14-MW capacity. It’s located in Planeta Rica, where we already operate a plant called Aurora.
This year, we have a rich portfolio and great opportunities. We want to expand our presence in mining, oil and gas and showcase that, despite being a renewables company, we can support and complement the extractive industry. We can help firms become more sustainable and reduce energy costs.

What makes your investment and asset management approach unique in the Colombian solar market?
We are investors and asset managers specialised in solar projects. We oversee our projects throughout their entire lifespan, funding them with 100% equity. Once these projects reach the COD, we refinance them to recycle the capital. Our goal is to operate these assets until the end of their useful life.
This approach gives us a significant competitive edge in terms of timing. When a client initiates a bidding process, we can start constructing the plant immediately and we guarantee the COD date. We do not need to wait for financial closure with banks. After the project becomes operational, we refinance it, eliminating the construction risk.
In Colombia, we are unique in guaranteeing a reduction in energy consumption. If we fail to achieve the promised energy savings, we will cover the shortfall.

Could you guide us through your latest refinancing plans?
Over the last two years, we have closed three refinancing processes. We try to group projects to make it easier for the bank to understand the business model, in terms of the rating of the offtaker and the lifespan of the PPA.
First, we took some air conditioning projects with Grupo Exito and refinanced them with Banco Davivienda. Then we took other types of energy efficiency projects and closed an important deal with Banco Santander. Our last financing project was in March 2024 with Banco de Bogotá for COP 172 billion [USD 43.5 million]. This was the third financing granted to GreenYellow’s business unit in Colombia. Through a project finance scheme, the funds will be used to refinance five small utility-scale projects and two self-consumption projects.
The fact that the banks are competing to finance our projects means that we are a strong player in the industry and that we have discipline in how we structure all these networks of contracts.

What are your expectations for growth in the next two years?
In 2021, we made a record investment of COP 48 billion [USD 12.2 million]. In 2022, we invested COP 165 billion [USD 41.8 million]. Last year, we invested COP 270 billion [USD 68.3 million]. We multiplied our investment by almost five in two years, and we are now a referent in the market. Last year, we became the second company in Colombia to connect utility-scale plants to the national grid.
In terms of growth in the near term, we want to invest around COP 300 billion [USD 76 million] per year. We have established all our structure and support areas, as well as our procedures, in order for our equipment to increase at the same pace as our investment. We want to continue growing in terms of megawatts installed and savings for our clients.

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