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France’s EDF Renewables said on Thursday that it will withdraw from the development of a solar power project in the Colombian department of Cundinamarca, citing “significant delays” in environmental permitting and unfavourable tax reforms in the country.
The defeated project is the 50-MW Pubenza in the town of Girardot, for which EDF Renewables secured a long-term power purchase agreement (PPA) in Colombia’s renewable energy auction in 2021.
The company also won a PPA for a 79.6-MW solar project in the department of Meta, but it said nothing about its current status in Thursday’s statement.
EDF Renewables mainly laid the blame for its withdrawal from Girardot on the regional environmental authority, which failed to grant permits and licences within the deadlines prescribed by law.
Rising interest rates and exchange rate volatility, along with regulatory and fiscal changes implemented since the 2021 auction also affected the future of the Girardot project. EDF pointed to a tax reform that impacted the profitability of projects and benefits for renewables under the Law 1715.
The company also referred to the Supreme Court’s decision on September 8 to annul the regulatory framework of the 2021 auction as unconstitutional. Despite the annulment, EDF says, the government still sent instructions to execute project commissioning guarantees for an amount exceeding COP 4.6 billion (USD 1.06m/EUR 1.01m), undeterred by pleas to avoid this from happening.
These and other challenges are the reason why none of around 2 GW of wind and solar projects awarded in Colombia’s auctions are currently in operation, EDF Renewables added.
With its decision, EDF Renewables has become the second European multinational to abandon a renewable energy project in Colombia. In May 2023, Enel Colombia, part of Italian utility group Enel SpA (BIT:ENEL), suspended indefinitely works on its 205-MW Windpeshi wind farm mid-construction due to intense community opposition.
(COP 1,000 = USD 0.23/EUR 0.22)
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