WIND

Colombia: Will Enel spark investor exodus?

Enel has put a 205MW project on hold in Colombia after long-running protests, and it is not the only company facing such unrest. We look at whether the government can improve consultation before it’s too late.

RICHARD HEAP

June 8, 2023

  • Enel has suspended work on a 205MW wind project in Colombia
  • Companies are facing protests in the wind-rich La Guajira region
  • Pressure grows on government to tackle issues with consultation

Enel Green Power last week announced that it has permanently suspended building work on its 205MW Windpeshi wind farm in Colombia’s La Guajira region.

Windpeshi was meant to be one of the largest renewables schemes in Colombia and help unlock investment in the wind-rich La Guajira region. However, ongoing protests have led to construction delays and forced Enel to put the project on hold indefinitely.

The case should serve as a warning of the difficulty of building wind projects in areas used by indigenous communities, and of the need for thorough consultation between developers, governments and local communities in the early planning stages. In this article, we look at whether Enel’s decision marks the start of an exodus of investors from renewables in Colombia, and what it means for the nation’s energy transition.
 

Community blockades

Enel won government consent for the 45-turbine Windpeshi project in 2020 and was originally due to complete it in 2022. However, the project was already two years behind schedule before Enel’s decision last week to put the project on hold indefinitely. The company said that this long delay was due to blockades and protests that frequently stopped work on site.

The project has attracted controversy because it was built on land in the north of La Guajira that is occupied by the Wayuu indigenous group. Some of the Wayuu have accused Enel of displacing people in the community and stoking violence. Enel has denied these claims and said it wanted to engage positively with local communities.

Enel asked for support from the Colombian government in February to help it speed up work at Windpeshi, but has now concluded the project is unviable. As well as being delayed by two years, the project is also reportedly millions of dollars over budget.

But Windpeshi is not the only project in Guajira that has faced such controversy. It is one of 16 schemes that are being built in the region, with a further 60 to be built by 2030, and many have faced similar issues.

Government officials have reported that construction-stage renewables projects should now be around 80% built on average, but most have not reached 30% due to protests. This shows that the issue is bigger than Enel.

We may yet see an exodus of investors from Colombia, but that will be down to the government rather than anything Enel has done. Enel’s troubles at Windpeshi are symptoms of broader challenges related to consultation, not the cause of them.
 

‍Investor concerns

The big questions now are what happens following Enel’s decision at Windpeshi.

The firm is planning two more wind farms in Colombia totalling 300MW – Chemesky and Tumawind – as well as two solar farms. Eugenio Calderón, head of Enel Green Power in Colombia and Peru, said it would “continue to engage with communities and stakeholders to address the implications of this decision [at Windpeshi]”, but it was still committed to expanding in Colombia.

The broader question is whether the crisis at Windpeshi will force the government to take the threat to renewables in Colombia seriously. La Guajira is key to the energy transition in Colombia, as it has the potential for 15GW-18GW of onshore wind out of the 30GW potential nationally identified by renewables association SER Colombia. It must be a major concern given that the country has just 40MW of operational onshore wind.

Diala Wilches, governor of La Guajira, reacted to Enel’s decision by proposing an urgent meeting with the national, departmental and local governments, as well as companies and local communities, to avoid an exodus of renewables investors.

She warned that “La Guajira cannot miss the opportunity to become a clean energy development centre” and urged Enel not to leave the region entirely.

However, the region could easily miss out on this opportunity if the Colombian government does not engage with the big issue: how can it make consultation with local communities and indigenous groups more rigorous so that developers can build trust and win support?

Officials have warned that there has been no institutional process for consulting local people on wind projects in La Guajira, and accusations of inadequate consultations have been echoed by the leaders of the Wayuu communities. This must be worrying for investors, who have seen similar protests in countries from Kenya to Norway.

And yet, that does not mean renewables investors will like the solutions. One idea to increase community buy-in is to increase the amount project owners need to invest in local areas from a current 1% levy on gross energy sales to 6%. That may help to win community support, but would also harm the profitability of projects.

Enel’s decision may force the Colombian government to take action to fix the issues that firms are facing in La Guajira – but the solutions could be equally painful.

Investment expertise. High-quality events. Exclusive content. Lead generation.

Talk to the Tamarindo team today to find out how membership would benefit your business.

Related content