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Electricity and public utilities in Colombia: the ESP company form, foreign ownership, free wholesale contracting, regulated tariffs, unbundling, investment risk and the 2026 energy storage rules

Last verified: 2026-10-27 · Status: Changing

Power, gas distribution, water and sanitation in Colombia are public utilities provided mainly by empresas de servicios públicos (ESP), which must be companies with shares, carry E.S.P. in their name and may be wholly owned by foreign investors. Wholesale electricity between generators, distributors, marketers and large unregulated users is freely priced, while sales to regulated end users follow CREG tariffs; companies formed to serve the grid may do only one activity except that marketing can be combined with generation or distribution, and investors bear the full risk of their projects. Since April 2026 a policy decree sets the services energy storage systems can provide and orders the CREG to define how they are paid, opening a new line for battery investment.

USD figures use the TRM (tasa representativa del mercado) of COP 3,157.94 per US dollar, valid 27 October 2026, from the official TRM series published by the Superintendencia Financiera on the national open data portal. Conversions are for orientation only.

Key facts

Foreign ownership allowed in public utility companies (ESP)	100 %Ley 142 de 1994 art. 19 num. 19.3, as of 2026-10-27 · in force
Deadline for the CREG to set storage remuneration schemes, from April 2026	12 monthsDecreto 1073 de 2015 art. 2.2.3.8.11.6 (Decreto 393 de 2026), as of 2026-10-27 · in force
Deadline for the Ministry to define stackable storage services, from April 2026	6 monthsDecreto 1073 de 2015 art. 2.2.3.8.11.5 par. 2 (Decreto 393 de 2026), as of 2026-10-27 · in force

The rule

1. Public utilities may be provided by empresas de servicios públicos (ESP); by individuals or companies producing the same goods and services for themselves or as a complement to their main activity; by municipalities directly; by authorized community organizations in small towns and rural or specific urban areas; and by entities in transition.Ley 142 de 1994, Régimen de los Servicios Públicos Domiciliarios, Art. 15, 1994-07-11 official text · verified 2026-10-27

2. Public utility companies (ESP) are companies with capital divided into shares whose purpose is providing the public utilities covered by the law; decentralized public entities whose owners do not want shares must take the form of an industrial and commercial State enterprise. The company name must be followed by 'empresa de servicios públicos' or 'E.S.P.', its term may be indefinite, and its capital may belong to national or foreign investors.Ley 142 de 1994, Art. 17 and art. 19 num. 19.1 to 19.3, 1994-07-11 official text · verified 2026-10-27

3. An ESP may provide one or more utilities or complementary activities, but the regulatory commissions may require a single purpose where multiple activities limit competition without economies of scale for users; multi utility companies must keep separate accounts for each service. ESPs may invest in other ESPs and associate with national or foreign persons, and any company, whatever its purpose, may invest in an ESP.Ley 142 de 1994, Art. 18 and par., 1994-07-11 official text · verified 2026-10-27

4. Electricity transactions between generators, between distributors, between them and marketers, and with unregulated users are free and paid at prices agreed by the parties, including international interconnection transactions. Sales to regulated end users are paid through regulated tariffs. Distributors must secure supply for the users they serve through contracts awarded under mechanisms that promote competition, with prices, quantities, delivery and penalties, and report them monthly to the CREG.Ley 143 de 1994, Ley Eléctrica, Art. 42 and par., 1994-07-11 official text · verified 2026-10-27

5. Companies created after the law to provide electricity in the national interconnected system may carry out only one of the sector's activities (generation, interconnection, transmission, distribution or marketing), except that marketing may be combined with generation or distribution. Investment decisions in generation, interconnection, transmission and distribution are the responsibility of those who make them, who bear in full the risks of building and operating the projects.Ley 143 de 1994, Ley Eléctrica, Art. 74 and art. 85, 1994-07-11 official text · verified 2026-10-27

6. For electricity the CREG must create conditions for an efficient supply able to meet demand, promote and preserve competition, set the conditions for gradual liberalization of the market, define the methodology for network access and use charges and dispatch charges, and approve those charges.Ley 143 de 1994, Ley Eléctrica, Art. 23 lit. a to d, 1994-07-11 official text · verified 2026-10-27

7. Policy guidelines enable the incorporation and payment of energy storage systems (SAE) in the national interconnected system and non interconnected zones, open to public and private entities and wholesale market agents. Storage may provide energy shifting, ancillary services (primary, secondary and tertiary frequency regulation, fast frequency response, voltage control and reactive reserves, black start, inertia and short circuit support), services for the transmission network such as congestion relief to defer grid expansion, demand response and capacity services. The Ministry of Mines and Energy, with UPME, defines within six months which services one system may stack, and the CREG must set the remuneration schemes for the services storage can provide within twelve months of the decree.Decreto 1073 de 2015, Book 2, Part 2, Title III, Chapter 8, Section 11, added by Decreto 393 de 2026 art. 1, Art. 2.2.3.8.11.1, 2.2.3.8.11.2, 2.2.3.8.11.4, 2.2.3.8.11.5 and 2.2.3.8.11.6, 2026-04-13 official text · verified 2026-10-27 · changed: Decreto 393 de 10 April 2026 (Diario Oficial 53.457, 13 April 2026, in force on publication) added the energy storage policy section to Decreto 1073 de 2015.

Topic	Rule	Source
Company form	Company with shares, name ending E.S.P., foreign capital allowed	Ley 142 art. 17 and 19
Wholesale prices	Free between generators, distributors, marketers and unregulated users	Ley 143 art. 42
Regulated users	Regulated tariffs	Ley 143 art. 42
Activities	One per company for new grid companies; marketing combinable with generation or distribution	Ley 143 art. 74
Network charges	Methodology and approval by CREG	Ley 143 art. 23
Storage	Services listed by policy decree; CREG to set remuneration	Decreto 393 de 2026

Who sets what in Colombian electricity

Worked example

A foreign developer can hold 100 percent of a Colombian generation company organized as a company with shares (sociedad por acciones) with E.S.P. in its name, sell its output under freely negotiated contracts to marketers or large unregulated users, but cannot also own the distribution business inside that same company.

Step by step

Incorporate the operating vehicle as a company with shares and add E.S.P. to its name before registering as a utility provider.
Decide the activity of each company: if serving the interconnected system, keep generation, transmission and distribution in separate companies, pairing marketing only with generation or distribution.
Sell to unregulated users and marketers under bilateral contracts, or bid into the competitive mechanisms distributors use to buy for regulated users.
For storage projects, track the Ministry's stacking definition and the CREG remuneration rules before closing financing.

Common traps

Multi utility companies must keep separate accounts per service, and the regulator can force a single purpose.
Project risk sits entirely with the investor by law; no State guarantee of returns is implied by planning documents or auctions.
Regulated tariffs apply to sales to regulated users even when the supplier is a private company with free wholesale contracts.

Sources

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