Solar energy investment means putting capital into a specific project, such as a solar farm or rooftop, whose results depend on how much energy it produces and the price it gets.
You don't need a roof of your own, but you do need to understand the business. This guide covers how a project goes from idea to operation, where its income comes from, what it costs and what can go wrong.
What solar energy investment means
If you're looking at investing in solar panels in Colombia, you'll usually find two routes: put a system on your own roof, or hold part of a project that sells energy to others.
Either way, the asset is the same: an installation that turns sunlight into kilowatt-hours for more than two decades. It has little in common with buying property, because the value lies in the energy the system produces and in who pays for it.
Solar rooftop
Installed on the roof of a shop, warehouse or factory. Nearly all the energy is used on site, so who consumes it and how much matter a great deal.
Solar farm
A photovoltaic plant on land, with panels mounted on the ground. It delivers its energy through the grid and tends to need more permits and a larger connection.
Self-generation
A user produces energy for its own use. Up to 1 MW it's called AGPE; above that size, AGGE.
Energy community
Several users share a system, and each one gets part of what's left over according to its surplus distribution percentage, or PDE.
From idea to operation, step by step
A solar project goes through six stages before and after it starts producing. Each one can change the result.
- 1
The site is chosen and the sun is measured
Irradiance tells you how much solar energy reaches that spot. Shade, the condition of the roof or land and the distance to the grid are studied too.
- 2
The system is designed
This sets the capacity in kWp, the panels and the inverters. It also produces the expected output and the capacity factor, which compares actual output with what the system would give at full power all year.
- 3
Permits and incentives are arranged
Depending on size, local and environmental permits are needed. UPME is the sector's planning body, and its certification is usually the route to the tax incentives.
- 4
The connection is requested
The network operator studies whether the grid can take the project, and the terms go into a connection agreement. This step is a common source of delays.
- 5
It's built
Under an EPC contract, one company answers for engineering, equipment purchasing and construction. The electrical installation must comply with RETIE.
- 6
It runs for years
Operation and maintenance, or O&M, covers cleaning panels, checking equipment and replacing what fails. Remote monitoring helps spot early when something is underperforming.
CREG regulates the electricity sector. Its Resolution 174 of 2021 sets the rules for small-scale self-generation, up to 1 MW, and for how its surplus is settled. Law 1715 of 2014 created tax incentives for renewable energy and Law 2099 of 2021 expanded them.
Where the income comes from and what it costs
A solar project creates value by selling energy or by avoiding having to buy it. Most of its costs come up front.
Sales under a PPA
A PPA sets the price a customer pays for the energy over several years. It gives visibility on income for as long as the customer keeps paying. Here's how it works.
Self-consumption savings
If the system's owner uses the energy, nothing is sold: each solar kilowatt-hour is one it no longer has to buy. Self-consumption is measured in savings on the tariff.
Surplus
Energy that isn't consumed goes to the grid. Surplus energy is settled under CREG's rules and tends to be worth less than energy used on site.
The numbers separate what's paid once from what's paid every year. LCOE rolls both into one figure: what it costs to produce each kilowatt-hour over the project's life.
CAPEX
The upfront cost: panels, inverters, structure, construction, connection, design and paperwork. It's most of the total cost.
Running costs
O&M and the other operating expenses: insurance, administration, accounting and local taxes.
Replacements
Inverters don't last as long as panels and are usually changed during the project's life. The projection should include this.
Degradation
It's not a payment, but it has a cost: panels produce a little less each year, so income falls if everything else stays the same.
One year of production, income and costs
A made-up example: a 500 kWp system on a warehouse roof, with a PPA signed with the warehouse's occupant. 80% of the energy is used there and 20% goes to the grid as surplus.
| Estimated production | Value |
|---|---|
| Installed capacity (kWp) | 500 |
| Annual production per kWp (kWh) | 1,400 |
| Energy sold under the PPA, 80% (kWh) | 560,000 |
| Surplus, 20% (kWh) | 140,000 |
| Annual production (kWh) | 700,000 |
That's a capacity factor of about 16%: 700,000 ÷ (500 × 8,760 hours in a year).
| First-year result | Pesos |
|---|---|
| PPA energy (560,000 kWh × 560) | 313,600,000 |
| Surplus (140,000 kWh × 280) | 39,200,000 |
| Operation and maintenance | −36,000,000 |
| Insurance | −9,000,000 |
| Administration and accounting | −14,800,000 |
| Result before taxes | 293,000,000 |
If the system cost 1,800,000,000 pesos (3,600,000 per kWp), that result would take about 6.1 years to recover the investment. It's a simplified calculation: it leaves out taxes, debt, price indexation and degradation.
| With less sun | P50 | P90 |
|---|---|---|
| Production (kWh) | 700,000 | 644,000 |
| Energy income (pesos) | 352,800,000 | 324,576,000 |
| Costs for the year (pesos) | −59,800,000 | −59,800,000 |
| Result before taxes (pesos) | 293,000,000 | 264,776,000 |
P90 is an output expected to be exceeded 9 years out of 10; here we assume it's 8% below P50. The recovery time moves from 6.1 to about 6.8 years.
Those two columns are the P50 and P90 scenarios. Curtailment counts too: it happens when the grid can't take all the energy and output has to be limited. We've left it at zero here.
If 18,000,000 pesos were 1% of the company that owns this system, and that company had no debt, 1% of the result would be 2,930,000 pesos before taxes and reserves. What actually gets distributed depends on how the project performs and on what the company decides.
That recovery time is the payback, a first measure. To see the whole project, calculate its return year by year.
The risks of investing in solar energy
A solar projection is an estimate. You could receive less than projected, receive it later or lose part of what you put in.
Production
The weather changes from year to year and panels lose capacity over time.
Connection and schedule
A delayed permit or connection point pushes back the first income.
Construction
If the contractor fails or runs late, costs can rise and the start of operation can slip.
The customer
If the buyer of the energy closes or stops paying, the project may lose its main income.
Prices and rules
A change in tariffs or in how surplus is settled can affect the numbers.
Liquidity
Selling your stake early may take a long time or not be possible. Think in terms of years.
How to invest in solar energy without a roof
Not everyone has a roof to use. There are several ways to take part without one, and each gives you different rights.
Become a partner in the project company
Many projects sit inside a company created just for them, or SPV. When you subscribe to shares, you hold part of that company, not of the panels.
Join an energy community
If you use energy near the system, an energy community lets you share it. It's closer to lowering your bill than to investing.
What to ask
What rights you have as a shareholder, how and when results are shared out, and which taxes apply.
To see it in practice, look at specific projects such as Granja Solar La Caucana or Solar Subway - La Pintada, with their information and risks. Before deciding, use this checklist to evaluate a project.
Solar energy guides
- How a solar project is put together in ColombiaThe two legal structures, the seven parties involved and the rules that govern a solar project in Colombia. What should be settled before building and which risks nobody controls.
- Solar energy in Colombia: the guide before you decideThe three ways to get solar energy in Colombia — buying the system, signing a PPA or joining an Energy Community — with what you gain, what you give up and when it isn't for you.
- What is a PPA, or power purchase agreementHow a solar power purchase agreement works in Colombia: the four steps, the six parties involved, what goes in writing and when it isn't for you.
- What is an Energy Community in ColombiaThe framework created by Law 2294 of 2023: how a group of neighbors and businesses share a solar farm, without installing anything or changing electricity company.
- Solar surplus energy: how it is settled in ColombiaWhat happens to the solar energy you produce and don't use. CREG's three regimes, what the PDE and the AGPE limit are, and which one applies to you.
- The price of electricity in Colombia through 2050One projection estimates the wholesale price will go from 250 to 766 pesos per kWh between 2026 and 2050. A solar contract can fix your price. The chart, the crossover year and what it means for your bill.
Related questions
Solar projects
See how it looks in a real project, with its term, its information and its risks.
Project in Structuring
Project in StructuringKeep going
- Granja Solar La CaucanaA solar farm, with its full information.
- Power purchase agreements: how they work as an investmentHow the contract behind many solar projects works.
- How to evaluate a projectThe key documents and questions before you invest.
Educational content. It is not financial, legal or tax advice, nor a public offering of securities. The figures in the examples are made up. Every investment carries risk and its results may vary.