Battery storage is at a global turning point. According to data from BloombergNEF (BNEF) and Ember, the levelized cost of four-hour battery storage systems (BESS) fell 27% year-on-year to $78 per MWh , while the capital expenditure (CAPEX) for these projects decreased by 31% .
In Colombia, cost reductions are not yet reflected in the market scale. The Erco Energía report estimates that the country has around 50 MW of installed capacity , far from the volume required to integrate new solar and wind power, cover nighttime demand, reduce congestion, and strengthen the reliability of the National Interconnected System.
The gap between the global decline in costs and local deployment puts the spotlight on economic indicators. The challenge is no longer limited to demonstrating the technical viability of batteries , but also to building mechanisms that allow for recouping the investment through contracts, availability payments, and remuneration associated with the services provided.
“ Colombia has the potential to position itself as a regional energy storage hub in Latin America ,” says Erco Energía. To realize this opportunity, the document identifies the need for appropriate regulatory frameworks, clear incentives, access to financing, and specialized technical training.
BESS is closing the gap with other technologies
Cost reductions are altering the competitive position of energy storage. The report places the levelized cost of large-scale solar photovoltaics at approximately $32 per MWh , while onshore wind is at around $38 per MWh .
However, those figures refer to generation without backup. The comparison changes when the capacity to deliver electricity outside of renewable production hours, respond to system variations, and cover periods of high demand is incorporated .
The combination of solar photovoltaics with storage has an estimated levelized cost of $59 per MWh . Offshore wind reaches around $74 per MWh , while four-hour BESS systems are at $78 per MWh .
Batteries are also beginning to compete with thermal technologies used to provide flexibility. A combined-cycle gas turbine power plant costs approximately $85 per MWh , compared to $90 per MWh for a battery storage system (BESS) with an eight-hour operating time.
In the backup segment, a solar solution with eight hours of storage costs around $95 per MWh , while a gas plant intended to meet peak consumption costs approximately $102 per MWh .
It is worth noting that, according to analyses focused on technology adoption curves, such as RMI's The Battery Domino Effect , battery sales have doubled every two to three years and could grow six to eight times by 2030 , reaching between 5.5 and 8 TWh annually . Each doubling of production reduces costs by 19% to 29% and increases energy density by 7% to 18%.
The US National Renewable Energy Laboratory (NREL) projects capital contractions of 18% (conservative), 37% (moderate), and up to 52% (advanced) for a 60 MW, 4-hour BESS system through 2035. This deflationary curve ensures that any financial model assumes substantially lower replacement or capacity increase costs over the next decade.
Colombia opens mechanisms, but bankability remains at stake
The Colombian market began to incorporate specific signals. The Energy and Gas Regulatory Commission opened calls for bids to award storage projects and established remuneration mechanisms aimed at attracting private investment and strengthening the flexibility of the grid.
In addition, there is the long-term contract auction for renewable energy and BESS projects. The process includes supplies starting in 2030 and 2035 , and incorporates storage as one of its main new features to facilitate the financing of new infrastructure.
These measures represent progress, although regulatory approval alone does not guarantee that projects will reach financial close . Investors need to know what income they will receive, for how long, and under what conditions they can combine different sources of remuneration.
However, Colombia still needs to define how several of these attributes will be remunerated . The market needs rules that prevent double charges, clarify availability obligations, and allow BESS (Built-in-Place Energy Service) plants to compete with conventional plants in providing ancillary services.
Current installed capacity contrasts with projected needs. By 2025 and early 2026, Colombia has an estimated installed operating base of between 14 MWh and 60 MWh from behind-the-meter (BTM) systems and small-scale generation projects . For its part, Erco Energía operates a 6.9 MWh BESS system in Paratebueno (Cundinamarca) and is making progress in stabilizing a 4.5 MWh unit in Tolima. The company seeks to deploy between 600 and 700 MWh, in line with a generation portfolio of 1200 MW.
At the utility scale level, Canadian Solar was awarded in the UPME STR 01-2021 call for bids, which includes a 45 MWh BESS system in Barranquilla.
The MME Pipeline of the National Energy Plan aims to exceed 1000 MWh operational by 2032.
Reliability will be a top priority on Colombia's energy agenda. The incoming Minister of Mines and Energy, María Nohemí Arboleda , will assume the position from her role as general manager of XM, the electricity system operator, with the challenge of developing pending capacity, advancing the new auction, and accelerating energy storage.
The missing signs in Colombia
According to Erco Energía, the first condition for unlocking the market is to consolidate long-term contracts that reduce revenue volatility . Financing will be more accessible if projects have solvent buyers, clear obligations, and timeframes compatible with the asset's useful life.
The company points out that the second step involves creating a formal and competitive market for ancillary services . BESS systems can regulate frequency and voltage faster than many conventional assets, but they need to receive specific payments for that availability and accuracy.
It will also be necessary to recognize the firm capacity provided during critical periods. A battery not only generates value through the megawatt-hours delivered, but also by remaining available to respond when renewable energy supply decreases or the grid faces constraints.
The fourth component is enabling revenue stacking , meaning that a single project can combine income from energy, capacity, and ancillary services. Regulations should prevent the asset from committing the same capacity to incompatible obligations, without hindering the efficient monetization of its different functions.
Finally, the calls for proposals should focus on the nodes where storage delivers the greatest value to the system. Location can be as important as installed capacity , especially when the goal is to alleviate congestion, improve the quality of supply, or postpone grid upgrades.
The regional comparison shows that Chile is several steps ahead in the incorporation of storage , driven by higher renewable penetration, greater transmission constraints and recurring episodes of solar energy curtailment.
“ Colombia is currently about 3-5 years behind Chile in the adoption curve, precisely because it is only just beginning to experience critical levels of nodal congestion during peak solar injection hours ,” says the Erco Energía report.
The global drop to $78 per MWh lowers the technological barrier. The next leap will depend on Colombia compensating not only for the energy discharged, but also for the flexibility, availability, and reliability that BESS systems bring to the grid.