Solar PV generation in Colombia - A qualitative and quantitative approach to analyze the potential of solar energy market

Abstract

Colombia faces several challenges to secure a reliable, affordable, and climate-friendly energy supply. Persistently low reserve-to-production ratios in oil and gas, together with advancing climate change, are putting the country’s energy system at risk. Heavily relying on hydro-power, Colombia’s electricity system will become more vulnerable with extreme weather patterns such as El Niño. This paper offers a multi-method study of the role of photovoltaic (PV), specially prosumage systems, to support a slowly starting energy transition in Colombia. First, qualitative data from an expert elicitation in Colombia’s energy sector is analysed. Second, a model to calculate the internal rate of revenue for households is used to identify optimal sizes for household PV or prosumage systems under the new regulatory framework. Key concerns emerging from the expert elicitation include lacking substantial financial aid, insufficient tax incentives, and high equipment prices, which raise investment and operation costs. Also, model results confirm net-metering implementation as an enabler of widespread deployment of household PV systems. Most profitable system configurations include PV systems without storage technology. Our findings show that financial instruments are still insufficient to scale-up household level PV deployment.