Renewable Energy Market Brief

An Expert's View about Energy in Ecuador

Posted on: 31 Oct 2011

 Summary
Ecuador’s geography includes a number of powerful rivers, ideal for hydroelectric power generation. As a result, a large portion of electricity produced in Ecuador comes from hydroelectric sources. Ecuador classifies hydroelectric power as renewable energy, a sector requiring upgrades and further development. Despite Ecuador’s potential in other renewable energy sources, such as wind, solar, and geothermal, they have not been largely exploited yet. As the demand for electric power in Ecuador grows, the country must continue to increase power generation to match growth in demand. The Government of Ecuador (GoE) expansion plan focus on hydroelectric power and a few wind and geothermal projects, opening opportunities for U.S. companies to supply equipment, machinery, technology, etc. to mainly public and a few private projects.

Narrative
Ecuador is one of the 26 member countries of the Latin American Energy Organization (Organización Latinoamericana de Energía, OLADE). According to OLADE, renewable energy represents 26 percent of the energy produced in the region, including hydroelectric power. OLADE indicates that in Ecuador, less than 5 percent of energy generated comes from renewable sources, such as a few wind and incipient geothermal energy projects.
The electric sector is organized into five areas with 19 main electric companies, eight private and 11 state-run or affiliated: generators (seven companies), distribution (11 companies), transmission (one company). The Ministry of Electricity and Renewable Energies (MEER) defines the policy for the sector.
Electricity produced in Ecuador comes from thermal generation -- gas, steam, and internal combustion -- (approximately 48 percent), 40 percent from hydroelectric sources, and 12 percent is imported from Colombia and Peru. A severe drought in 2009 drastically reduced water levels at the major hydroelectric plant which supplies 35 percent of the country’s demand. This caused nationwide rolling blackouts, and made evident Ecuador’s urgent need to increase its power generation to cover the annual increase in demand of 5 to 7 percent.
Ecuador has substantial potential to develop a wide range of renewable energies. Currently, renewable energies (relatively small biomass plants, not including hydropower) contribute only 2 percent to the country’s energy matrix, but government plans through the Ministry of Electricity and Renewable Energy are to increase this to 10 percent by 2020.
The use of renewable energies is expanding in the environmentally fragile Galapagos Islands. However, on Ecuador’s mainland, potential projects in geothermal, wind, and solar are in demand, but suffer due to funding shortfalls.
In April 2007, through foreign grant financing, the Government of Ecuador initiated a program of “Zero Fossil Fuel in the Galapagos” successfully installing three Spanish wind turbines on San Cristobal to cover 30 to 70 percent of the island’s energy needs.
The first jatropha-fueled generating plant, partially funded by a German grant, (shoots of jatropha, a bush with seeds from which oil can be extracted to be used as fuel in multipurpose diesel engines), is expected to begin operation in 2011, to provide power to Floreana Island and replace its two diesel generators. Santa Cruz is developing a three stage program. In 2011, a wind farm of 2.25 MW is expected to be completed on Baltra to cover approximately 25 percent of Santa Cruz’s power needs. By 2015, Santa Cruz plans to generate over 90 percent of its power from renewable sources.

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Posted: 31 October 2011

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