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The Effect of Spot Price Control on the Future Electricity Supply

Author

Listed:
  • Marín, Jorge Barrientos

    (Faculty of Economics Science, Grupo Microeconomía Aplicada, University of Antioquia, Colombia)

  • Hoyos, Santiago

    (Faculty of Engineering, Instituto Tecnológico de Antioquia, Colombia)

  • Alviar, Mauricio

    (Secretary of Education of Antioquia, Colombia)

Abstract

This paper examines the effects of regulating spot price (energy generation prices) in the Colombian electricity market on the future supply and the expansion of the energy matrix. The analysis is conducted considering the recent draft resolutions from the energy and gas regulatory commission (CREG), which aim to intervene in the spot price given the increase in generation prices attributed to persistent extreme weather events such as the El Nin?o or La Nin?a Phenomenon, as well as the ongoing complaints from end users, particularly in the regulated market. The study employs econometric methods (autoregressive distributed lag models -ARDL-) and the construction of an investment function based on the concept of levelized cost of generation (LCOE). The findings suggest that a price restriction (either through regulation or presidential decree) would imply an excess of demand over supply and a reduction in investment in new projects. This would inevitably lead to the deterioration of the National Interconnected System (SIN), thereby compromising the country's energy self-sufficiency and sovereignty.

Suggested Citation

  • Marín, Jorge Barrientos & Hoyos, Santiago & Alviar, Mauricio, 2025. "The Effect of Spot Price Control on the Future Electricity Supply," International Journal of Energy Economics and Policy, Econjournals, vol. 15(3), pages 114-119, April.
    • Handle: RePEc:eco:journ2:v:15:y:2025:i:3:id:18740
    DOI: 10.32479/ijeep.18740
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