Offshore Wind in Colombia – First Round gaining traction

Europe, Colombia

The first offshore wind round is the name given by Government of Colombia (“GoC”) to the first and ongoing international competitive process (the “Competitive Process”) that began on December 4, 2023, and is expected to result in the issuance of Temporary Occupation Permits (“Permits”) in maritime areas North of the Colombian Atlantic coast for the development of offshore wind energy generation projects (the “Projects”). As we will explain in further detail below, holders of the Permits will subsequently have the right to request maritime concessions.

If the Competitive Process is successful, several developers of onshore and offshore wind projects and of offshore oil & gas projects will be selected. The choice will be made among those developers who have been previously authorized to present offers by the ANH, after having demonstrated that they meet the legal, financial and technical capacity requirements.

The GoC estimates that each of the Projects that will be developed as a result of the first offshore wind round will have an installed capacity of 1 to 3 GW, which would avoid between 27 and 81 million tons of CO2 equivalent emissions.

Colombia’s energy market and offshore wind resource

In the Colombian electricity market, energy is traded between generators and retailers, which represent regulated and non-regulated end-users in the market.

In 2023, total electricity generation reached 79.3TWh. About 78.4% of total generation came from hydroelectric plants, and gas generation covered 18%. Generation with non-conventional renewable energy sources (“FNCER”) - such as geothermal, wind, and solar - covered 1% in 2023. FNCER generation project developers have obtained permits to connect to the grid for 7GW.

Colombia’s Mining and Energy Planning Unit (“UPME”) estimates that, by 2052, the country’s offshore wind generation installed capacity will be in the range of 10 to 18 GW. In turn, the country’s draft Just Energy Transition Roadmap estimates that Colombia’s offshore wind installed capacity will reach 7 GW by 2040 and 13 GW by 2050. The estimated total potential is 109 GW, of which 50 GW can be developed on the country’s Atlantic Coast.

World Bank providing support to the GoC

In April 2024, the World Bank’s Board of Executive Directors approved a USD 750 million low-interest loan to support Colombia’s efforts to transition to a sustainable, climate-resilient and low-carbon development model. This loan follows a USD 1 billion loan announced in December 2022.

Part of the proceeds of the USD 750 million loan has been destined to support Colombia’s first offshore wind round and the regulatory and institutional changes required for the success of this initiative.

Rights granted to developers

Each Permit will grant its holder the exclusive right to develop, at its own expense and risk and subject to the conditions established by DIMAR, in the maritime area covered by the Permit, activities related to measurement, research, and collection of data and information that serves to establish the viability of the so-called Projects.

Obtaining the Permit (and the timely completion of the activities contemplated therein) is one of the necessary prerequisites for its holder to subsequently request a maritime concession, which is an act of an authority (in this case, to be issued by the DIMAR) which grants its holder the rights to use and enjoy the maritime area that was the subject of the Permit to carry out the activities of construction, operation, maintenance, and dismantling of offshore wind farms.


The Competitive Process is subject to a schedule, which was last modified on May 22, 2024.

Currently, the Competitive Process is in the prequalification phase of interested parties, which began on December 21, 2023.

Interested developers have until September 27, 2024, to submit the required documents and information.

The ANH has until November 20, 2024, to publish a definitive list of qualified developers, who will be able to participate in the following phases of the Competitive Process.

On November 21, 2024, the phase for submission of applications for nominations of maritime areas by qualified developers will begin. The Bid Rules impose on the nominators the obligation to carry out a significant effort to request and obtain information from various entities of the GoC, as well as to compile and analyze the information obtained, which must be provided to the ANH, so that the DIMAR can use the information and decide whether or not the nominated areas are suitable for the development of Projects.

This phase will expire on March 25, 2025. As a result (and during the course) of the area nomination process, DIMAR has the power to evaluate and determine the suitability of Polygon B areas.

Proponents have until April 24, 2025, to present their offers, after which the ANH will evaluate the offers presented. This phase will end on August 6, 2025.

The final phase of the Competitive Process will begin on August 8, 2025, and will end on December 15, 2025. By the latter date, DIMAR will have issued the Permits.

Importance of the First Offshore Wind Round

If Colombia is successful in the First Round and manages to attract top-level energy developers and they, in turn, develop offshore wind farms, eventually (in the second part of the 2030s) substantial non-conventional sources of renewable energy generation will be incorporated into Colombia’s energy matrix. This will increase energy security and make it easier to ensure that electricity prices remain stable and affordable, achieving greater equity in the electricity prices that consumers must pay. The country's dependence on the generation of water resources will also be reduced, which will allow Colombia to better deal with recurring phenomena such as El Niño, which increases the price of energy in times of drought.

Efforts of the GoC to increase the attractiveness of the Competitive Process

Initially, the Bid Rules established very rigorous conditions for the accreditation of financial capacity and technical capacity to undertake activities under the Permit. This resulted in multiple requests from interested parties, as a result of which the GoC decided to initiate a process to amend the Joint Resolutions to reduce the exigent requirements for the Permit stage. As of the date of publication of this report, this process is ongoing.

The reduction of the prequalification requirements is expected to enhance the attractiveness of the First Round. The GoC’s stated aim is to increase the interest of foreign developers and thus strengthen competition within the framework of the Competitive Process.

State Support

The GoC engaged AFRY AB, an internationally recognized Swedish supplier of engineering, design, and advisory services, to advise on the design and development of offshore wind support mechanisms that may provide support to the Projects.

In the context of this advice, AFRY AB studied the support mechanisms implemented in Great Britain, The Netherlands, Taiwan, and Japan and engaged in dialogue with important energy players.

The main challenges identified for the introduction of offshore wind to Colombia’s energy matrix are:

  • The design of an adequate commercialization mechanism considering the peculiarities of Project costs and development
  • Clarity in the required processes to obtain environmental licenses and carry out social consultations with communities in the areas of influence of each Project
  • Access to grid connection and ensuring a timely expansion of Colombia’s electricity transmission system.

AFRY AB concluded that the existing support mechanisms in Colombia, such as the Reliability Charge and long-term contract auctions, do not provide the necessary support for the development of offshore wind projects. They have also concluded that a two-way Contracts for Difference (CfD) mechanism may provide the necessary support, as internationally, this mechanism has proven effective in attracting large volumes of installed offshore wind generation capacity and provides long-term stability for the total energy sold in the spot market.

To implement two-way CfDs in Colombia, the country must develop its public policy and regulatory framework, to allow, among others, the coexistence of all support mechanisms, to clearly define a specific methodology and connection point allocation for offshore wind farms, and the expansion of the country’s grid to ensure that the offshore wind farms will have access to the grid to inject their energy to the National Interconnected System (“SIN”). It is not expected that the efforts the GoC must undertake will impact the timeline of the first offshore wind round.

Access to the Grid

Requests for the issuance of interconnection permits must be made during the validity of each Permit.

Each interconnection permit will be issued by UPME. UPME formulates Colombia’s Transmission Expansion Plan to ensure the necessary infrastructure is in place so that each Project will be able to inject energy into the Grid.

During webinars conducted in mid-June, 2024, representatives of the GoC indicated that, as policy enablers, the GoC will guarantee access to the transmission grid to holders of concessions resulting from the first offshore bid round. In this connection, work will be required to harmonize the respective timelines of the Grid expansion and development of the Projects.