Colombia on track to pip Brazil to the offshore wind post

Colombia is on course to become the first Latin American country to launch a process for awarding seabed rights for offshore wind development, although the market seems to be more interested in Brazil's slower-moving efforts, according to a new study by industry specialist Aegir Insights.

Colombia published last month draft tender documents for a seabed allocation process launching in December 2023, with final award of concessions at the beginning of 2025.

Colombia has some optimum locations for offshore wind, with average speeds of 8-12 metres per second on the northern Caribbean coast, especially off La Guajira peninsula, in the north-east, Aegir noted.

With lawmakers in Brazil dragging their feet over approvals of a regulatory framework for offshore wind, Colombia has a chance to steal a march.

But Aegir found that offshore wind developers are showing much more interest in Colombia's larger neighbour, with a proliferation of memorandums of understanding and partnerships.

In Colombia, the report mapped 12 proposed projects representing capacity of 5.6GW, 11 of which were accounted for by a pairing of BlueFloat Energy and Enerxia Renovables. The twelfth, a 350MW project, was proposed by Copenhagen Infrastructure Partners through an MoU with the city of Barranquilla.

Only four of the proposed projects are within the areas defined by the government for the first tender.

In contrast Brazil has more than 80 announced projects that, on some accounts, can add up to 140GW, although many of these are on overlapping areas.

One MoU alone, between Petrobras and Equinor, outlines a possible 14.5GW from seven offshore wind farms.

A muted response from the offshore wind market to Colombia could be explained by challenges relating to underdeveloped infrastructure and perceptions about offtake options, and difficulties in negotiating with indigenous communities, the Aegir study observed.

But the high level of interest in Brazil could ultimately leave more room to enter the market in Colombia, it added.

Fixed-bottom

In the near to medium term, Aegir said, Colombia’s build-out is to be focused on lower cost fixed-bottom wind, where there is 38GW of potential, most of which is found in areas with wind speeds above 9m/s.

Colombia's first tender is for areas by the cities Barranquilla and Santa Marta, where the infrastructure is better.

Infrastructure is lacking most to the east in La Guajira, which happens to be the region with the best wind conditions

The first tender will award seabed rights based on purely qualitative criteria and successful bidders are required to enter a consortium with a Colombian company, with state-controlled oil group Ecopetrol seen as the front-runner.

Drivers for the development of offshore wind include the need to diversify energy due to declining reserves in oil and gas and also the stated policies of the current administration.

President Gustavo Petro was elected last year on a campaign platform that included a pledge to phase out fossil fuels — a key export earner for Colombia — but has run into obstacles.

Negotiations with indigenous communities have so far delayed both renewable energy, generation and transmission projects on La Guajira, repeating a historical pattern where the development of oil installations frequently stoked up conflict and deadlock over demands for compensation.

On the other hand, Aegir said developing offshore wind resources off the Caribbean coast can help circumvent grid bottlenecks between the North and the rest of the country while reducing Colombia’s current dependence on hydropower.

The planned government-run renewable energy auctions were described as "technology-agnostic".

"Unless capacity is fenced off for only offshore wind, it will be hard for it to compete in the renewable energy auctions in the regulated market," Aegir observed.

Aegir Insights' development scenarios saw offshore wind capacity reaching 5-10GW if La Guajira also becomes a development area, "potentially due to the hydrogen route to market opening", but restricted to 1-2GW if the build-out is restricted to Barranquilla and Santa Marta.

Brazilians worried

In Brazil, where the northeastern, southeastern and southern coasts all offer excellent conditions for wind, and infrastructure and logistics for the offshore oil and gas industries are highly developed there is, nevertheless, a growing concern among industry leaders over the year-long delay in approving the regulatory framework for offshore wind.

These concerns were expressed by the Brazilian Petroleum Institute (IBP) this week, amid strong interest among companies such as Petrobras, Equinor and TotalEnergies in investing in offshore wind in Brazil.

In a written statement, the IBP urged lawmarkers to treat debate and approval of the regulatory framework for offshore wind as a matter of urgency, "so that the country can create an attractive business environment and take advantage of the window of opportunity that is opening for this source of energy around the world".

The IBP stated:" The delay in structuring a consistent regulatory framework could lead international investors, pressured by tightening deadlines for decarbonisation, to prioritize investments in other countries, leading to under-utilisation of (offshore wind) in Brazil.