Why Schrader Camargo is upbeat about Colombia's energy sector

In the second installment of a two-part interview, Schrader Camargo general manager Andrés Canela tells BNamericas about the opportunities and challenges in Colombia's energy sector. 

Projects on the company's radar include hydropower and thermopower plants, transmission lines, offshore oil and gas developments, distributed generation, LNG and green hydrogen. 

The first part of the interview can be seen here.

BNamericas: Apart from Hidroituango, Schrader Camargo has participated in various hydroelectric, thermoelectric and transmission line projects, among other initiatives. Can you tell us a little about them?

Canela: We have worked with all fuels: with reserve plants when they were diesel, open cycle gas, combined cycle, coal, and also in several hydroelectric plants. Perhaps the most recent hydroelectric plant in which we previously worked was Quimbo. It was a consortium with General Electric where we made all the equipment for generation, transmission, the line and all the secondary concrete within the power house. We've been active in several of the projects that are being launched or have recently been launched. For example, we worked on the El Tesorito and Termocandelaria thermoelectric plants, which are already operating.

BNamericas: Are you interested in non-conventional renewable energy as well?

Canela: We're also starting to work in non-conventional renewables and we think that we're going to be an important player. We've been very patient to understand where the big developments are going to be. We've understood that the challenges [with the communities] in La Guajira are yet to be resolved. But we think that the economics are there, the need is there and I believe that the willingness is also there.

I think that funds will flow towards greater investments in renewable energy. We have to overcome this hump soon and be able to open up this path, but we're making different gambles and we understand that this opportunity is going to happen. And we've taken all the actions we can to be ready at that time.

BNamericas: Do you have any participation in the projects that are facing delays in La Guajira?

Canela: We are not involved in any projects in La Guajira as a company. We have several clients who are, but the ones we're currently working on are in different areas. And we hope that La Guajira, with the tremendous potential it has, will soon also be an area where projects can be carried out for the benefit of local communities, for the benefit of the entire country.

BNamericas: The Colombian energy sector is facing lots of challenges, such as delays and cancellations of projects, the departure of some investors, liquidity problems, high prices in the spot market due to the El Niño phenomenon, etc. How do you see the climate for investors?

Canela: Yes, there are several fronts to the issues. I believe that we have to find a way so that the uncertainties surrounding the sector can be resolved. But, despite that, we see a significant volume of work, of investments. In other sectors, we've also seen investment levels that we thought could be higher. But we still see a dynamic that's moving. On the topic of cogeneration and smaller generation, distributed generation, for example, we see that it still makes a lot of sense.

"So, moving away from the world of large projects, we can see that there's still investment in energy, oil and gas, mining and other sectors of heavy industry. One would always like the investment climate to be much better, but I think that the clients we're working with are looking at the medium and long term and continue betting that Colombia is an attractive destination. Despite everything that's said and everything that you might read in the press, Colombia is an interesting destination. As a company, we're certainly making important bets.

BNamericas: Can you tell us a little more about those bets and the opportunities they're focused on?

Canela: We've made important investments in machinery, in capacity, to be able to be well positioned for these investments, which can be measured. From a demand point of view, there are certain areas where demand is growing tremendously. One of them is energy. Another is the transformation of [sustainable] packaging. In Colombia the food and beverage industry is growing, so demand is being generated and obviously supply is coming. I think that the political issue isn't the most important, but rather that as long as there's demand we're investing.

BNamericas: You mentioned distributed generation. Are you seeing a trend towards decentralization of the electricity market and therefore opportunities in smaller projects?

Canela: Gradually. What we're seeing is that for a lot of clients with these new possibilities of carrying out distributed energy developments, the figures and returns on those projects are becoming interesting. I believe that all the electrification requirements, not only because of the issue of the cost of energy itself, but because of all the needs to clean up their operations and make them much more environmentally friendly, we're think there are important requirements and investment opportunities for clients.

And we think that, given that the projects can be done at lower costs than 10 years ago, added to the cost associated with doing it another way, these investments make more and more sense. We see interesting projects in cogeneration, in self-generation, and I think it's a sum of different factors. We're working with three clients, for example – I can't name them – who are doing large projects to electrify their operations.

BNamericas: Do you see opportunities in the oil and gas and LNG sector?

Canela: We've worked a lot in the downstream oil and gas area and in the exploration area. We've been less active, except for some units that we've worked on, but we've worked on everything related to wells, from the well station to the refinery or the different end products. Regarding the offshore sector, we think that there are going to be important developments. The announcements that the companies have made imply this, which has very big implications on the onshore side. We plan to participate in all the services for these facilities.

On the onshore side, there are still significant investment needs in infrastructure. We're very active and optimistic, let's say, that this volume of work will be maintained. With regard to the issue of LNG, I believe that Colombia is already making the decisions that will force or promote these investments to be made in some way.

BNamericas: Hydrogen seems to be the hot topic in Colombia's energy sector right now. Do you plan to enter that business?

Canela: Well, we're talking to a couple of clients where we see some very specific applications and I believe that they're highly viable for the hydrogen issue. We're confident that the clients we're working for today have the appetite to finance it, they see appetite in the market. We think that the technology for these processes is already approved, invented and works, and Colombia has interesting potential. If our calculations are correct, between 2025 and 2026 Colombia will already see projects operating in the area of green hydrogen.