Carlos Jaime Franco

Lessons from deregulation in Colombia: successes, failures and the way ahead

We analyze and evaluate the evolution of the deregulated market for electricity in Colombia in the period from 1995, when deregulation took place, to 2002. The case of Colombia is of particular interest as it is one of the most open markets in the developing world as well as being predominantly based on hydroelectrical technology. Furthermore, Colombia has had no blackouts since deregulation, in contrast to a number of neighboring countries, even though Colombia has had periods with severe adverse weather conditions. Colombia has so far managed to adjust the regulatory environment to keep investment at a reasonable level. Finally, we discuss the prospects for the Colombian system over the next 5 years.

PREDICCIÓN DE SERIES TEMPORALES USANDO MÁQUINAS DE VECTORES DE SOPORTE

Time series prediction is an important research problem due to its implications in engineering, economics, finance and social sciences. An important topic about this problematic is the development of new models and its comparison with previous approaches in terms of forecast accuracy. Recently, support vector machines (SVM) have been used for time series prediction, but the reported experiences are limited and there are some problems related to its specification. The aim of this paper is to propose a novel technique for estimating some constants of the SVM usually fixed empirically by the modeler. The proposed technique is used to estimate several SVM with the aim of forecast five benchmark time series; the obtained results are compared with the statistics reported in other papers. The proposed method allow us to obtain competitive SVM for the time series forecasted in comparison with the results obtained using other most traditional models.

Simulating the new British Electricity-Market Reform

The British government is implementing fully its novel Electricity Market Reform (GB EMR). Its objective, in line with European directives, aims at replacing existing nuclear and coal plant with low-carbon systems, to deliver reliable and affordable power. Though the GB EMR has proposed several policy instruments for meeting its objectives, and the academic literature has discussed the main issues, no known report includes a comprehensive and dynamic simulation exercise that assesses the extent of this profound and important initiative. This paper presents a system dynamics model that supports analysis of long-term effects of the various policy instruments that have been proposed in the GB EMR, focusing on environmental quality, security of supply and economic sustainability. Using lessons learned from simulation, the paper concludes that effectively achieving the GB EMR objectives requires this comprehensive intervention or a similar one that includes the promotion of low carbon electricity generation through the simultaneous implementation of various direct and indirect incentives, such as a carbon price floor, a Feed in Tariff (FIT) and a capacity mechanism.

Making Progress Towards Emissions Mitigation: Modeling Low-Carbon Power Generation Policy

The need for regulation of greenhouse gases (GHGs) sets policy challenges to the energy industries in the twenty-first century, given the major climate threat that has manifested in recent decades. The focus will thus be on environment-related issues, including emissions, renewable-based technology, and change in consumer-use patterns. In this context, policy aims at preserving and maintaining security of supply as well as a competitive environment within both power generation and energy-intensive industries. There are enormous uncertainties regarding the effect of GHGs on climate change in Latin America and on the structure of the electricity sector in the future. In spite of the obvious threats, these conditions also provide opportunities not yet explored. A low-carbon policy aims at changes regarding: regulation, demand, supply, market structure, management, and in general, the competitiveness of the power generation industry. In this direction, it is neither clear what structural changes should be adopted within the electricity sector, nor what are the opportunities that this policy may offer. This article assesses the effect of GHG policy on the Colombian electricity sector, based on system dynamics simulation; it also indicates how emission costs and incentives in the electricity sector induce technology changes leading towards a low carbon economy.

Policies for the utilization of hydropower potential in Colombia using small plants

Small hydro plants in Colombia are an alternative for generating renewable energy but only approximately 2.25% have developed; to encourage the use of these systems in Colombia a feed in tariff policy is studied for small hydro power plants with generating capacity between 1 MW to 10 MW connected to the national grid, since their energy cost is above the pool price. Also recommendations are set to overcome barriers to implementing this technology in Colombia and a review of the current Colombian regulatory framework is performed.

Chapter 14 – Latin America Energy Integration: An Outstanding Dilemma

This chapter examines energy integration issues within Latin America, with a discussion of the current situation, focusing on both the “haves” and “have-nots” and the benefits and drawbacks from energy integration. It examines the opportunities and prospects for the future, in particular with a discussion of some of the benefits that might be attained from widespread integration of electricity markets within the region, and why these opportunities have not been achieved to date, identifying the geopolitical issues that should be considered in any integration effort, and the progress that has been achieved so far by looking at the regional experiences in energy integration. Among the conclusions of this chapter is the belief that for energy integration to succeed in Latam, a compelling belief is needed within policymakers and political establishment on the benefits that can be attained from such integration.

Qualitative Analysis of Climate Seasonality Effects in a Model of National Electricity Market

In the following chapter, we present a model for the supply and demand of electricity in a domestic market based on system dynamics. Additionally, the model shows piecewise smooth differential equations arising from the diagram of flows and levels, using dynamical systems theory for the study of stability of the equilibrium points that have such a system. We also present simulations, nonlinear numerical analysis, and qualitative analysis to the system of differential equations obtained, which is characterized by dynamics not smooth, due to the way decisions are made in that market. Using the software package Vensim and event-based scheme implementation in Matlab are verified as different saturation phenomena, oscillations, fixed points, among others, and the relationship between leverage points and stability of equilibrium points. Finally, we conclude the effects of climate seasonality in the market. Furthermore, we show that the system becomes periodically forced due to the external variable.

Financial analysis of photovoltaic configurations for Colombian households

In this paper we analyze the financial feasibility of different solar configurations as alternatives of microgeneration at Colombian homes. We designed five solar solution configurations considering the connection availability to national grid, batteries as a storage option, and the possibility to sell the surplus to the national electricity system. Then we developed a financial model to determine microgeneration cost of each configuration and we compared those costs with the electricity tariff offered by local electricity companies. We found that all the configurations (ie, with or without batteries and grid connection) represent saving money for residential users along several cities, which sets the solar technology as a real solution for electricity micro generation in Colombia.

Methodology for the financial valuation of a power plant under regulatory changes

In this paper is quantified the impact on the financial viability of smaller plants in the Colombian Electricity Market-MEC by modifying the rules of participation in the mechanism of firm energy payment (Cargo por Confiabilidad) from the implementation of the norm Resolución CREG 138/2015. A valuation model is used under the methodology of discounted Free Cash Flow ‑ FCF with a rate for the sector, considering the different sources of funding and structure of income and costs of a 19.9 MW hydroelectric plant taking into account benefits from energy sales and firm energy remuneration and expenses associated with the investment, operating costs and MECs own. It is found that the implementation of the new regulation would result in significant impacts affecting even the viability of these power plants.

Impact of devaluation on grid parity for residential solar generation in Latin America

In the last two years, Latin America has experienced a high devaluation of regional currencies, which means a decrease in the foreign price of national goods. In this paper, we analyze the impact that local currency devaluation has in the parity grid for solar electricity generation systems at a residential level. We developed a financial model based on the Levelized Cost of Energy indicator for nine Latin-American cities, considering two different scenarios: 2014 and 2016 prices. We found that devaluation delays the grid parity for solar generation for all analyzed cities. With 2014 prices, 3 out of nine cities would reach its grid parity in the 2016 year, while with 2016 prices, cities would reach the parity from the year 2023. Results highlight the financial feasibility for house-holding solar generation, and expose the price risk for the Latin-American market.