Distributed renewable energy in Colombia : Unlocking private investment for non-interconnected zones

Colombia has prioritised the use of renewable energy to expand and improve electricity services for its population in zones non-interconnected to the national grid. Recent policies and regulations have supported this ambition with successive measures to strengthen investment conditions for distributed renewable energy, like standalone solar photovoltaic (PV) solutions and hybrid solar PV mini-grids. Still, the distributed renewable energy market in non-interconnected zones is relatively immature, reflected by the high costs for connecting new users. New business and financing models will be critical to bringing down the cost of renewable energy technologies, accessing private equity and debt in larger volumes, and ultimately progressing towards replacing existing inefficient and polluting diesel generation systems. Building on international experiences, this paper discusses approaches to strengthening investment conditions, looking at support mechanisms and de-risking instruments used elsewhere, which can help bridge the financing gap in Colombia.