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Incentives for wind power investment in Colombia

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  • Contreras, Javier
  • Rodríguez, Yeny E.

Abstract

This paper develops an energy policy measure for renewable sources in Colombia, in particular wind generation. The proposal is done at the decentralized level, in isolated areas of the country, where electricity coverage is below 12% and wind speed is suitable for power generation. The goal of this policy is focused on increasing electricity coverage in those remote areas of the country that have high winds in order to develop clean generation investments that can represent a benefit for low-income users. Thus, a mechanism for financing these kinds of investments is proposed, involving the private sector and using the mechanism known as Public Private Partnerships – PPPs. PPPs are mechanisms used by the public sector to establish a contract with the private sector. The private sector provides capital and ability to develop projects, while the public sector holds the responsibility in service delivery. To model the relationship between public sector and private investors, a bilevel programming method for efficient resource allocation, combining an auction mechanism and moral hazard, is presented. A case study is shown in the Colombian context.

Suggested Citation

  • Contreras, Javier & Rodríguez, Yeny E., 2016. "Incentives for wind power investment in Colombia," Renewable Energy, Elsevier, vol. 87(P1), pages 279-288.
    • Handle: RePEc:eee:renene:v:87:y:2016:i:p1:p:279-288
    DOI: 10.1016/j.renene.2015.10.018
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    Cited by:

    1. Shrimali, Gireesh & Konda, Charith & Farooquee, Arsalan Ali, 2016. "Designing renewable energy auctions for India: Managing risks to maximize deployment and cost-effectiveness," Renewable Energy, Elsevier, vol. 97(C), pages 656-670.
    2. Jadidoleslam, Morteza & Ebrahimi, Akbar & Latify, Mohammad Amin, 2017. "Probabilistic transmission expansion planning to maximize the integration of wind power," Renewable Energy, Elsevier, vol. 114(PB), pages 866-878.
    3. Andres F. Paez & Yecid Mu oz Maldonado & Adalberto Ospino Castro, 2017. "Future Scenarios and Trends of Energy Demand in Colombia using Long-range Energy Alternative Planning," International Journal of Energy Economics and Policy, Econjournals, vol. 7(5), pages 178-190.
    4. Yeny E. Rodríguez & Miguel A. Pérez-Uribe & Javier Contreras, 2021. "Wind Put Barrier Options Pricing Based on the Nordix Index," Energies, MDPI, vol. 14(4), pages 1-14, February.
    5. Dong, Weiwei & Zhao, Guohua & Yüksel, Serhat & Dinçer, Hasan & Ubay, Gözde Gülseven, 2022. "A novel hybrid decision making approach for the strategic selection of wind energy projects," Renewable Energy, Elsevier, vol. 185(C), pages 321-337.

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    More about this item

    Keywords

    Decentralized level; Wind power; Bilevel programming; Auctions; Moral hazard;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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