Let the light be made! This is how electricity is generated in Colombia

The imminent arrival of the El Niño phenomenon has set off alerts in the Colombian electricity sector before the impact that this climatic event could have on the system.

Concerns are focused on the fact that, with the onset of El Niño, the possibility of an increase in energy prices in the country becomes more evident, given a possible shortage due to droughts and greater demand for thermal supply.

To better gauge the impact that this climate variation could have, it is necessary to understand how electricity generation works in Colombia.

(See: A Hidroituango turbine has not been stabilized: what happens).

It is common to think that for electricity to be used in homes, supermarkets, hospitals, companies and in general in the commercial and industrial sector of the country, it is enough to turn on a switch.

However, the process involves many other actors.

In Colombia, electrical energy is generated from different sources, hydraulics being the one that has the greatest weight when producing, on average, 80% of the electricity. In other words, a large percentage of the light we consume is generated with water.

(See: Inflation in May: sectors that pushed up the figure of 12.36%).

This source of generation is followed by fossil fuels such as gas and coal, which, by going through a thermochemical or thermoelectric process, are converted into electrical energy. This technique is also known as thermal energy.

Both are vital generation methods, since if the reservoirs go down, the thermoelectric plants are in charge of starting up to ensure the country’s electricity supply and thus ensure the efficient provision of this service.

If we refer to the data, according to information from the operator XM, cut to September 2022, it was recorded that the energy source with the greatest contribution was hydraulics with 81.6%. The rest are distributed as follows: fossil fuels (16.8%), biomass (1.0%), solar (0.5%) and wind (0.1%).

Electricity.

The process to transport energy is divided into two stages: transmission and distribution.

In the first stage, electrical energy is transported from the generation plants to the consumption centers. This is done through cables supported by tall towers that allow this service to be carried over long distances throughout the country.

The next step is to distribute the energy from the large consumption centers to the point of entry to the final consumer’s facilities.

It is at this point that another concept is introduced: energy trading.

(See: The plan for Ecopetrol to enter electricity generation).

Commercialization is the process by which large amounts of energy are purchased from producers to sell it to users or to other companies in the sector.

In other words, if the distributors are responsible for the network to which the service connects with the users, The traders are in charge of buying this resource in the wholesale market, transferring their costs to the clients, providing the service and carrying out the billing.

In Colombia there are two types of energy market: the regulated one, in which residential, commercial and industrial users with lower consumption mainly participate, and the unregulated one, aimed at those companies or organizations with high electricity consumption and that can be participants. of it voluntarily.

(See: The plan for Colombia, Ecuador and Peru to connect electricity markets).

It should be remembered that this activity, as well as generation, interconnection, transmission and distribution, is defined by the Laws 142 and 143 of 1994, with which the Colombian electricity sector is governed and in which the regime for the provision of public services is established.

In addition, The entity in charge of carrying out the regulation is the Energy and Gas Regulation Commission (Creg)

light prices

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To understand the possible impacts that El Niño could have on electricity rates, one of the key factors to take into account is the degree of exposure of traders to stock prices.

According to figures from the Superintendence of Public Services, at least nine companies, which have 35.5% of the connections, currently buy more than 30% of their electricity in this market.

(See: Prior to the El Niño phenomenon, reservoirs last 50 days).

These prices define how much the bill will be affected by the prices in the spot market, that is, in the energy market, when hydrology is low.

This could lead to a further increase in rates in eight areas of the country (Huila, Bogotá, Popayán, Caquetá, Chocó, Cali, Nariño and Arauca)the same ones in which the companies with a higher level of purchases on the stock market operate.

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