In the electricity market, demand has traditionally played an essentially passive role: consumers use electricity, and the system must make enough resources available to meet that consumption. CREG Resolution 101 111 of 2026 introduces a different model. For the first time on a permanent basis, consumers will be able to offer voluntary load reductions in the electricity spot market and receive payment when those reductions are economically efficient.
The concept is straightforward: if, in a given hour, it is more efficient to pay consumers to reduce part of their demand than to serve that demand with more expensive generation, that flexibility can become a market resource. An accepted reduction lowers the demand that must be met through dispatch and may also reduce spot-market purchases and prices.
From temporary measures to a permanent mechanism
Demand response is not new in Colombia. CREG Resolution 011 of 2015 established a program for the day-ahead market under critical conditions. Years later, in 2024, hydrological conditions and the effects of El Niño led CREG to test a more direct form of active demand participation in the spot market through load-reduction offers.
CREG Resolution 101 043 of 2024 created the first temporary program. In addition to supporting security of supply, it was designed to test the mechanism with a view to a permanent solution. The experience showed participation by different representatives, aggregation of consumers, and offers priced at levels comparable to generation resources. Months later, as hydrological conditions deteriorated again, CREG Resolution 101 054 of 2024 established a second temporary program while CREG continued developing the permanent framework. The results of these experiences provided the basis for the mechanism ultimately adopted in 2026.
Who can participate?
The program is open to electricity consumers, including self-generators with or without surplus energy and users with remote self-generation. Participation is voluntary and takes place through a Demand Response Representative (DR Representative), which may be different from the retailer that normally supplies the consumer.
The representative may aggregate reductions from several consumers. This matters because the minimum positive offer is 1 MWh per hour, allowing consumers that cannot reach that volume individually to participate as part of an aggregated offer.
However, regulatory eligibility does not mean that every consumer can participate immediately. Each DR commercial boundary must have an Hourly Consumption Baseline (LBCH) and a metering system capable of recording and reporting hourly consumption to ASIC. The LBCH is built from historical hourly consumption data and provides the reference for determining how much electricity the consumer actually reduced.
In practice, this requirement may initially limit participation by regulated consumers that still use conventional metering. Aggregation reduces the scale barrier, but it does not remove the metering and baseline requirements that apply to each participating consumer.
How does the mechanism work?
Each day, the DR Representative submits an offer to the CND for the following 24 hours. The quantity may differ by hour – zero, or at least 1 MWh when positive – but a single price in $/MWh must apply throughout the day. The offered quantity may not exceed the commercial boundary’s current LBCH or, for an aggregated offer, the sum of the baselines of the participating consumers.
Not every load-reduction offer is accepted. The CND assesses whether activating a particular reduction is expected to generate a market benefit that offsets its cost. It does so by comparing the expected market outcome with and without the demand reduction. If lower consumption avoids more expensive spot-market purchases or reduces the price paid on part of the remaining spot exposure, the offer may be economically beneficial and therefore accepted.
Once an offer is accepted, the reduction is reflected in subsequent dispatches as lower demand to be served by the system. Demand response is therefore not treated as a generating plant, but it can provide an economic alternative to more expensive generation resources.
How is the reduction verified and paid?
After operation, ASIC compares the measured consumption in each hour with the LBCH in effect when the offer was submitted. If actual consumption is below the baseline, the difference is the verified reduction. If consumption does not fall below the LBCH, there is no reduction to be paid.
Payment is based on the verified reduction multiplied by the offered price, subject to the amount previously offered and accepted. The consumer and its DR Representative are free to agree on representation fees and on how and when the payment received is passed through to the consumer.
The offer is also binding. If the difference between the committed reduction and the verified reduction exceeds the tolerance allowed by regulation, a deviation charge applies. During the first six months of operation, that charge will be calculated and reported by ASIC but will not yet have financial consequences.
Who pays for the reductions?
The regulation seeks to allocate the cost to those that obtain the economic benefit from activation. ASIC will assign the cost of the mechanism to market participants that, without the demand response activation, would have had to serve demand through spot-market purchases, in proportion to the purchases avoided.
For the time being, the amount passed through to end users will be included in the restrictions component of the Unit Cost of Service, for consumers exposed to the spot market. The cost is therefore not initially spread across all system demand. In addition, the acceptance test itself is designed to ensure that the cost of paying for the reductions does not exceed the economic benefit they generate.
A different mechanism from the energy savings program
The demand response mechanism under CREG Resolution 101 111 should not be confused with the temporary energy-savings incentive program for regulated consumers. That program operates automatically through individual consumption targets and bill-based incentives. Demand response, by contrast, is voluntary, operates within the Wholesale Energy Market (MEM), and requires representation, a registered commercial boundary, hourly metering, and the submission of market offers.
When does it start?
CREG Resolution 101 111 has been in force since June 17, 2026, but the mechanism cannot begin operating until the ideal pre-dispatch procedure has been amended and the CND has completed the corresponding operational changes.
To that end, in August CREG published Draft CREG Resolution 701 141 of 2026, which incorporates DR offers into the ideal pre-dispatch procedure. Once the final resolution is published, the CND will have one month to complete the required changes, and offers may begin three business days after that period ends.
Operational implementation has continued in parallel. In July, XM published the final procedure for estimating the LBCH and, on September 14, updated the forms for registering DR commercial boundaries and updating the LBCH. CREG also approved, through CREG Circular 332 of 2026, the indicator methodology ASIC will use to monitor the mechanism.
The challenge now is making it work
The regulation creates a meaningful new avenue for demand to provide flexibility to the market, and it arrives at a particularly relevant time: in September 2026, through CREG Circular 343 of 2026, CREG declared the start of the supply-shortage risk period associated with El Niño 2026-2027. Its impact, however, will depend on implementation. The mechanism is not yet operational, and the requirements for hourly metering, registration, and LBCH development may initially limit the pool of participants.
It will also be important to see whether offers are sufficiently competitive and whether the reductions ultimately mobilized generate material savings in the spot market. CREG’s monitoring indicators should provide a basis for measuring that performance once the mechanism becomes operational.
CREG has opened the door for consumers to take a more active role. The real test will be how much demand is able to participate – and how much value that participation ultimately brings to Colombia’s electricity market.