'Colombia is a beacon of opportunity for Latin American offshore wind'

As the global offshore wind industry faces challenges amidst economic uncertainties, rising interest rates, and supply chain vulnerabilities, it is natural that many developers are concentrating on their home markets to ride out the storm. But in such challenging times, it is all the more important to look ahead and identify promising new markets that can offer not only low risk, but also potentially high rewards.

In this context, Colombia emerges as a beacon of opportunity, poised to become the first country in Latin America to launch a seabed tender competition and spearheading the industry in the region.

Strong foundations

Vast coastal waters in the Caribbean boasting some of the most impressive offshore wind resources across the world sets Colombia apart as an ideal location. The areas preliminarily identified show net capacity factors up to almost 70% for fixed foundation water depths. Leveraging over 50 years of experience in servicing the offshore oil and gas industry, Colombia possesses a skilled workforce and transferable know-how. Moreover, the country’s strong institutions and regulatory framework, emphasising fair competition and transparency, provide a solid foundation for investors seeking stability and security.

A new administration has taken over since, reaffirming the country’s commitment to realise its potential. Offshore wind is now part of all the scenarios of the country’s National Energy Plan, with up to 18GW by 2052 expected in the Energy Transition scenario. But the efforts of the government to tap into its resource go beyond merely an ambitious target. Colombia launched the first seabed tender round at COP28 in Dubai, with a view to awarding around 3GW.

Government commitment

Colombia’s current energy mix relies heavily on hydropower. But with El Niño weather patterns bringing severe draughts and power outages, the country needs to find long-term solutions. This variability in the baseload generation technology also causes very high peak pricing in periods of drought. Introducing offshore wind electricity generation will help lessen these peaks, whilst offering investors the opportunity to access high multi-year seasonal pricing not seen in Western Europe. Such a diversification in energy production can also critically contribute to decreasing reliance on the volatile fossil fuel market while creating new jobs and economic development.

However, concerns persist. In the development of transmission infrastructure in sensitive regions like La Guajira, indigenous communities' interests must be carefully addressed. The mapping of environmental and social sensitivities, together with a more prominent role by the government in providing mediation, would help developers navigate locally important topics and achieve social licensing within the duration of the temporary occupation permits, while ensuring responsible and sustainable development practices.

The government also recognises the importance of learning from established markets. They have implemented a free centralised data room with all datasets relevant to potential bidders. Furthermore, they have set up a 100% quality-based process for assessing bids, with the aim of attracting qualified investors and avoiding unnecessary increases in project costs.

Over the past few years, the government has been consistently engaging with industry stakeholders to better understand their needs and concerns. They have extended deadlines for consultations on key regulatory documents to reassess, amend and progress, demonstrating the openness for collaboration with the private sector. One key message has been the need for a revenue support mechanism. The government – with support of the WBG - have analysed available options on the most effective system to support offshore wind development. An announcement on the intended mechanism is expected soon.

Colombia continues to rely on development partners and Multilateral Development Banks (MBDs) such as the WBG to mature key workstreams in building a successful offshore wind market. Over the past years, the WBG has been supporting the authorities with global expertise and grants on key issues such as regulatory strengthening and environmental and social sensitivity mapping, and will remain a solid partner in this endeavor for the years to come.

Some in the industry remain hesitant to dip their toes in the water of a new market. But as the industry faces difficult times now, it is important to remember that due to its long development timelines, offshore wind is a marathon, not a sprint. Getting your foot in the door now by taking advantage of Colombia’s commitment and solid foundations for offshore wind can unlock a sea of future opportunities in Latin America.