Incentives for renewable energy in reformed Latin-American electricity markets: the Colombian case

Given the importance of renewable energy sources for reducing the threat of global climatic change without compromising economic development, this paper explores regulatory alternatives that may facilitate the introduction of renewable energy in the Colombian electricity market. The analysis is based on a simulation model of the electricity market that represents the behaviour of the agents involved, and their decision to invest according to proposed incentives. The possible expansion of renewable energy depending on different incentives is examined. This research is carried out in the Latin-American context, and accordingly we present the exploitation potential of renewable sources for electricity generation in the region. This paper shows how restructuring electricity markets, such as the Colombian and others in Latin America, may be an efficient means to promote the use of renewable energy.