WSHPDR_2013_Final_Report-updated_version

the clean energy sector dominated by biofuels and
small hydropower, which gained 48 per cent and 37
per cent of cumulative investment, respectively. 6
Currently, small hydropower projects in Colombia are
financially attractive, but in addition to this positive
outlook, studies indicate that future cost scenarios for
small hydropower, along with modern biomass, are
expected to improve, making them strong contenders
in the future market, given that the Government
favors these technologies. 9 There is at least one local
company for turbine manufacturing and at least one
company for operations and maintenance active in the
small hydropower sector. 6
Renewable energy policy
Environmental laws have been applied in Colombia
since the late 1990s concerning general ecological
aspects and environmental impacts. However, all
legislation concerning renewable energies were
initiated in 2001. 11 Law No. 697/2001 and its
Regulatory Decree 3683 of 19 December 2003 provide
certain incentives for scholarship, research and
development for renewable and alternative energy
sources. 11
Since 2002 various tax based incentives have been
incorporated into Colombian policy, such as income
tax exemptions for biomass and wind generation and
exemption from import duty on all equipment related
to carbon credits. 6
Thereafter, resolution 18-0919 on 1 June 2010
adopted the 2010-2015 Indicative Plan of Action to
develop the Program on Rational and Efficient Use of
Energy and other forms of Non-Conventional Energy
(PROURE). PROURE gives high priority to several lines
of action related to the promotion of nonconventional
energy sources, for instance the
characterization of the country’s small hydropower
potential, for which the required investment is
estimated to be Col$300 million.
Legislation on small hydropower
According to Article 3.14 of Law 697/2001, which
establishes and promotes the rational and efficient
use of energy as well as the use of alternative energy
devices, small hydropower is defined as the potential
energy gained from a hydraulic flow on a certain
altitude not exceeding 10 MW of electricity
production. 10 In addition, Law No. 697 makes available
incentives for research and development in the field of
small hydropower. 11
Legislation surrounding small hydropower does not
consist of significant financial tax or subsidies.
However a few incentives have been implemented
such as research grants, tax exemptions and reliability
charge exemptions for small hydropower (