Colombia launches long-term electricity auction, opens participation to battery energy storage systems

The Colombian Ministry of Mines and Energy issued Resolution 40208 on April 21, 2026, establishing a new long-term electricity contracting mechanism designed to reduce demand risk, limit exposure to wholesale price volatility, and support the integration of new renewable generation and storage capacity into the power system. The scheme entails 15-year contracts, with obligations commencing on January 1, 2030, and awards required to be completed by July 31, 2026.

According to the ministry, the call for proposals is intended to strengthen system reliability, expand the participation of non-conventional renewable energy sources, and address concerns about meeting electricity demand from 2027 onward, amid heightened vulnerability to climate phenomena such as El Niño. The resolution is also aligned with Decree 1091 of 2025, which set public policy guidelines for long-term contracting of generation, storage, transmission, and other electricity supply services.

The mechanism defines four products. The first covers 24-hour contracts, with possible start dates in 2030 or, alternatively, in 2035. The second targets solar generation between 6:00 a.m. and 6:00 p.m. The third combines two delivery blocks – 8:00 a.m. to 5:00 p.m. and 5:00 p.m. to 9:00 p.m. – designed to accommodate hybrid projects. The fourth focuses on supply between 6:00 p.m. and 10:00 p.m., a peak-demand window that provides a direct market signal for battery energy storage systems.

For the first time, the resolution explicitly incorporates dedicated products for battery energy storage systems, alongside differentiated schemes for solar PV and hybrid plants. According to the ministry, this structure is intended to increase flexibility and system stability while supporting compliance with obligations for electricity retailers to include renewable energy in their procurement portfolios.

Participants include both buyers and sellers in the wholesale energy market. Marketing agents may participate as buyers, while generating agents, as well as owners, developers, or commercial representatives of generation projects, may participate as sellers, subject to eligibility and prequalification requirements.

The process will be administered by a specialized auction operator. In its final stage, the government indicated that execution will be handled by the Colombian Mercantile Exchange. The published timeline foresees contract awards by July 31, 2026, commercial operation of projects by the end of 2029, and the start of contractual obligations on January 1, 2030. For the additional Product 1 window, obligations would begin on January 1, 2035.

The tender effectively reopens Colombia’s long-term renewable contracting framework with a broader scope than previous rounds, explicitly integrating energy storage and time-based delivery structures. In January, pv magazine reported that the new mechanism was designed to help bridge the gap preventing some retailers from meeting renewable procurement thresholds and would operate under a 15-year contract structure.

From pv magazine LatAm