Feasibility analysis to implement self-generation solutions in non-regulated users in Colombia

Abstract

This article introduces a comprehensive technical-financial model designed to assess the feasibility of implementing photovoltaic self-generation solutions for non-regulated users (NRU) in Colombia, based on current regulations and national energy market conditions. The study examines the risks, incentives, and technical aspects of solar photovoltaic generation, alongside contractual alternatives: Engineering, Procurement, and Construction (EPC) contracts and Power Purchase Agreements (PPA). Employing the Project Finance methodology, the model evaluates various scenarios, assumptions, and sensitivities over a 25-year period, integrating primary and secondary data, and considering regulatory, technical, and financial factors. Detailed analyses include energy balance, capital expenditures (CAPEX), operational expenditures (OPEX), expected revenues, and greenhouse gas emission reductions. The model outputs provide key decision-making indicators, enabling NRUs to select the most suitable option aligned with their strategic growth, energy sustainability policies, and risk appetite. A case study involving a coffee milling facility in Chinchiná, Caldas, illustrates the technical and financial viability of the project, revealing that the EPC alternative yields higher percentage savings and profitability, albeit with a higher initial investment, while the PPA offers quicker returns but lower savings. Furthermore, the results are benchmarked against global data from the International Renewable Energy Agency (IRENA), confirming the model’s consistency and competitiveness. The study highlights the significance of a robust and favorable regulatory framework to promote the democratization and decentralization of electricity generation in Colombia, supporting the country’s energy transition towards non-conventional renewable energy sources.