Learning from Developing Country Power Market Experiences : The Case of Colombia
The Colombian power market was established in 1995, driven primarily by concerns about the reliability of supply in the largely hydro-based domestic power system. The power sector reform was expected to help avoid blackouts by attracting private in...
| Main Authors: | , |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/898231552316685139/Learning-from-Developing-Country-Power-Market-Experiences-The-Case-of-Colombia http://hdl.handle.net/10986/31397 |
| id |
okr-10986-31397 |
|---|---|
| recordtype |
oai_dc |
| spelling |
okr-10986-313972022-03-19T12:15:49Z Learning from Developing Country Power Market Experiences : The Case of Colombia Rudnick, Hugh Velasquez, Constantin ELECTRICITY POWER SECTOR ENERGY EMERGING MARKET ECONOMIES TRANSMISSION AND DISTRIBUTION NETWORK NATURAL GAS POWER SECTOR REFORM The Colombian power market was established in 1995, driven primarily by concerns about the reliability of supply in the largely hydro-based domestic power system. The power sector reform was expected to help avoid blackouts by attracting private investment and increasing the efficiency of existing capacity. However, two decades after its inception, the market has not been successful in providing reliable supply along competitive outcomes. This paper analyzes the experience of Colombia with power markets, including market design, implementation, and outcomes. A single-node, bid-based market was established overnight, with bilateral contracts among market participants (mostly short-to-medium term). The original regulated capacity payment was replaced in 2004 by a reliability market intended to ensure supply during tight hydrological conditions (mainly due to El Nino phenomena). However, the Colombian power sector is currently showing signs of structural weakness: the reliability market has shown dysfunctionalities, the government has intervened the market during critical situations, and concerns persist regarding market power exercise. The experience of Colombia is important for other developing countries, since it highlights the challenges of designing and implementing a power market that successfully provides reliability, competitive outcomes, and sustainability. Although key local hydrological conditions were considered in the design of Colombia's capacity market, the market had difficulties delivering intended outcomes due to design and institutional issues, particularly the lack of a comprehensive approach to gas supply and transport. 2019-03-14T19:50:27Z 2019-03-14T19:50:27Z 2019-03 Working Paper http://documents.worldbank.org/curated/en/898231552316685139/Learning-from-Developing-Country-Power-Market-Experiences-The-Case-of-Colombia http://hdl.handle.net/10986/31397 English Policy Research Working Paper;No. 8771 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Colombia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ELECTRICITY POWER SECTOR ENERGY EMERGING MARKET ECONOMIES TRANSMISSION AND DISTRIBUTION NETWORK NATURAL GAS POWER SECTOR REFORM |
| spellingShingle |
ELECTRICITY POWER SECTOR ENERGY EMERGING MARKET ECONOMIES TRANSMISSION AND DISTRIBUTION NETWORK NATURAL GAS POWER SECTOR REFORM Rudnick, Hugh Velasquez, Constantin Learning from Developing Country Power Market Experiences : The Case of Colombia |
| geographic_facet |
Latin America & Caribbean Colombia |
| relation |
Policy Research Working Paper;No. 8771 |
| description |
The Colombian power market was
established in 1995, driven primarily by concerns about the
reliability of supply in the largely hydro-based domestic
power system. The power sector reform was expected to help
avoid blackouts by attracting private investment and
increasing the efficiency of existing capacity. However, two
decades after its inception, the market has not been
successful in providing reliable supply along competitive
outcomes. This paper analyzes the experience of Colombia
with power markets, including market design, implementation,
and outcomes. A single-node, bid-based market was
established overnight, with bilateral contracts among market
participants (mostly short-to-medium term). The original
regulated capacity payment was replaced in 2004 by a
reliability market intended to ensure supply during tight
hydrological conditions (mainly due to El Nino phenomena).
However, the Colombian power sector is currently showing
signs of structural weakness: the reliability market has
shown dysfunctionalities, the government has intervened the
market during critical situations, and concerns persist
regarding market power exercise. The experience of Colombia
is important for other developing countries, since it
highlights the challenges of designing and implementing a
power market that successfully provides reliability,
competitive outcomes, and sustainability. Although key local
hydrological conditions were considered in the design of
Colombia's capacity market, the market had difficulties
delivering intended outcomes due to design and institutional
issues, particularly the lack of a comprehensive approach to
gas supply and transport. |
| format |
Working Paper |
| author |
Rudnick, Hugh Velasquez, Constantin |
| author_facet |
Rudnick, Hugh Velasquez, Constantin |
| author_sort |
Rudnick, Hugh |
| title |
Learning from Developing Country Power Market Experiences : The Case of Colombia |
| title_short |
Learning from Developing Country Power Market Experiences : The Case of Colombia |
| title_full |
Learning from Developing Country Power Market Experiences : The Case of Colombia |
| title_fullStr |
Learning from Developing Country Power Market Experiences : The Case of Colombia |
| title_full_unstemmed |
Learning from Developing Country Power Market Experiences : The Case of Colombia |
| title_sort |
learning from developing country power market experiences : the case of colombia |
| publisher |
World Bank, Washington, DC |
| publishDate |
2019 |
| url |
http://documents.worldbank.org/curated/en/898231552316685139/Learning-from-Developing-Country-Power-Market-Experiences-The-Case-of-Colombia http://hdl.handle.net/10986/31397 |
| _version_ |
1764474236576989184 |