Colombia: Ongoing Ituango crisis highlights urgent need for electricity

Ituango hydroelectric

With the ongoing delays to completion of the 2.4-GW Ituango hydro project in Colombia as a result of landslides, Colombia must fast track power generation projects with short construction times to avoid a future energy deficit, warns grid operator XM.

Construction of the Ituango project has been postponed indefinitely following a series of landslides at the site. Ituango was expected to begin operating in December 2018 and be supplying more than 17% of the country’s electricity by 2021.

XM said in a statement that there is no risk of a short-term of medium-term deficit despite the possibility that a greater contribution of thermal generation could be required, BNamericas reports. However, XM warns the country does not have the firm energy needed to guarantee supply beyond 2022 without Ituango.

About 70% of electricity in Colombia comes from hydropower, with thermal generation contributing about 21%.

Power sector regulator Comision de Regulacion de Energia y Gas (Creg) also published resolutions outlining new proposals that guarantee firm energy in the medium and long term. Two of the four proposals involve an auction to expand firm energy capacity, and a mechanism promoting new generation projects that can contribute firm energy without participating in an auction.

Ituango update

Empresas Publicas de Medellin (EPM), Ituango’s developer, has said it plans to raise up to US$1 billion from asset sales to meet commitments for its Ituango project. Transactions could involve controlling and minority stakes in subsidiaries in Colombia and abroad. The company also could tap cash reserves of US$490 million and available credit lines totaling US$1.3 billion.

Just days earlier, EPM announced it was canceling its planned acquisition of a majority stake in Gas Natural to free funds to deal with the situation at Ituango.

“The board seeks to have at its disposal all of the funding alternatives that allow it to make timely decisions and continue with the investment, operation and debt service plans, taking into account the effects of the [Hidroituango] situation,” EPM said in a securities filing.

Fears of new landslides have prompted authorities to raise flood warning levels for communities surrounding the dam. More than 23,000 people have been evacuated from their homes since the initial landslide on April 28, which blocked a tunnel used to regulate water flow between the dam’s spillway and the Cauca River.

Telesurtv.net reports that EPM “evacuated all 1,500 workers from the site on Tuesday, effectively shutting down the project for the second time in a month.”

EPM has already been forced to release water into the turbine rooms to avoid flooding, and experts are forecasting “brutal” damage to the plant’s equipment, BNamericas reports.

New development activity

With the focus shifting to bringing new projects online quickly, the Caldas department of Colombia will hire an investment bank to decide a financing model for its 120-MW Miel II hydro plant, Governor Guido Echeverri has stated.

Miel II is expected to cost US$250 million to develop, and Echeverri said, “It is an attractive proposal for private, regional, national, international investors, because the project has enormous economic, social and environmental advantages.”

One advantage Echeverri cited is that Miel II is run-of-river, meaning it does not require a large dam and thus does not provide environmental risks. It will feature a 7-meter retention dam.

Miel II will be located on the eastern slope of the Cordillera Central and use water from the La Miel, Tenerife and Pensilvania rivers. A consultancy services contract with a bank is likely to be awarded very quickly, with Echeverri ruling out selling the project to a private investor.

UPME, the mining and energy planning unit in Colombia, upgraded the plant to phase 2 in its project registry in mid-May. This calls on developers to provide economic feasibility studies, according to BNamericas.

When complete, Miel II is expected to generate 620 GWh of electricity annually.

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Elizabeth Ingram is content director for the Hydro Review website and HYDROVISION International. She has more than 17 years of experience with the hydroelectric power industry. Follow her on Twitter @ElizabethIngra4 .

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