The Energy and Gas Regulatory Commission (CREG) took a key step toward the development of energy storage in Colombia by issuing new regulations that establish the framework for the widespread adoption of battery storage systems (BSS). Among the main innovations, the regulations enable calls for proposals to select investors , who will be able to develop strategic projects and access regulated remuneration mechanisms.
One of the most important aspects of the regulation is that the Mining and Energy Planning Unit (UPME) will be responsible for issuing calls for proposals to select the projects deemed necessary for the system. Interested parties must submit economic proposals based on an Expected Annual Revenue .
Under open competition, investors will submit their technical and financial bids. The project will be awarded to the bidder with the lowest financial offer . If only one bid is received, other interested parties may submit counteroffers lower than the published bid, and the project will be awarded to the bidder with the lowest counteroffer.
For projects awarded through UPME's bidding processes, the investor not only wins the auction but must also submit a Performance Bond to guarantee project completion on schedule. Furthermore, it's crucial to note that every project will have an independent oversight firm responsible for auditing the timeline, the quality of the work, and certifying the start of commercial operation. A serious breach reported by the oversight firm will trigger the execution of the bond, and the investor will lose the project.
This regulatory advancement comes at a time when energy storage is gaining prominence in Colombian energy planning. In fact, the country had already incorporated this technology into the design of its upcoming long-term contract auction, which includes specific requirements for projects with storage capacity associated with renewable energy sources.
How will batteries be able to operate in the Colombian electricity market?
The regulation also establishes a classification that differentiates three forms of participation of storage systems within the Colombian market.
On one hand, SAEBs appear as Network Assets , conceived as infrastructure intended to support the operation of transmission and distribution systems. Their function will be to postpone investments in physical networks, manage congestion, and contribute to the stability of parameters such as voltage and frequency.
The regulation establishes strict quality rules: SAEBs, as network assets, have a maximum unavailability limit of 175 hours per year . If they exceed this limit, or if their unavailability results in Non-Supply Energy (NSE), they will be subject to compensation that will be deducted from their monthly payments.
On the other hand, Independent SAEBs are created, defined as storage systems with a capacity equal to or greater than 5 MW that do not share assets with generation plants.
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These projects will be able to participate directly in the wholesale market by selling energy and providing complementary services to the system. However, the resolution requires that any independent SAEB (Energy Savings and Credit Association) must enter into a contract to be represented by a generating agent already authorized in the Wholesale Energy Market (MEM).
The Superintendency of Industry and Commerce (SIC) warned that this could create barriers to entry or competitive dependence, so the CREG forced generators to publish objective and non-discriminatory conditions on their websites for offering this commercial representation
Furthermore, the SAEBs have the unavoidable obligation to provide Primary Frequency Regulation services, both during load and unload states. Additionally, they may voluntarily offer Secondary Frequency Regulation (AFR) services for real-time system balancing.
The third category corresponds to Hybrid Generation Resources , a modality that integrates batteries with existing generation facilities, such as solar or wind farms. In these cases, storage operates within the same commercial boundary and allows for optimized energy delivery to the grid.
According to Hemberth Suárez Lozano, founding partner of OGE Energy , the importance of the regulation lies in the fact that it creates a concrete path for storage to actively participate in the Colombian electrical system under different operational and commercial schemes.
“UPME will issue calls for proposals to select investors. This presents an opportunity for foreign private investors to participate in the Colombian electricity sector and receive annual compensation,” Suárez Lozano told Energía Estratégica.
According to the expert, the regulatory approach responds to a combination of factors that have increased the importance of energy storage within the national energy agenda. These include the reduction in technology costs, the growth of variable renewable energy sources, and the need for tools that provide flexibility and resilience to the electrical grid.
Another key change focuses on smaller-scale projects. The regulation simplifies access procedures for Small-Scale Self-Generation (SSE) and Distributed Generation (DG) initiatives through streamlined connection processes and reduced documentation requirements.
At the same time, the regulation incorporates mechanisms to prevent operational problems in areas with high energy resource penetration. Independent SAEBs (Energy Supply and Distribution Systems) must request transmission capacity under the current rules, while systems larger than 1 MW must have Grid-Forming technology, capable of contributing to grid stability even under conditions of power weakness.
Likewise, the National Dispatch Center (CND) may coordinate the loading and unloading operation of storage systems when necessary to preserve the safety and economic efficiency of the system.
With this new regulatory framework, Colombia seeks to position energy storage as one of the pillars of the energy transition, creating a market with specific rules to attract private investment and accelerate the deployment of batteries in the country.