In June 2012, President Correa visited the newly opened Jaramijó plant in Manabí, celebrating the launch of a geothermal power generation facility in the region. The plant has the potential to deliver 140 MW of electricity to people in the area, one of the many rural regions of Ecuador that is struggling to gain access to the country’s power supply. Via an investment of $150 million, 70% of demand will be met by the plant’s operations. To support these disadvantaged groups as well as diversify the country’s power generation sources, the government is teaming up with private enterprises and foreign investors to meet domestic demand.
Long dependent on its hydroelectric power plants, which contribute roughly 70% of the total electricity supply, Ecuador suffered an electricity shock in 2009 when the worst drought in 40 years struck the country’s hydro sector. According to some estimates, up to $1 billion in output was lost. In the months following the crisis, the government shifted its focus to include different sources of electricity—mainly geothermal. In addition, the National Electricity Council (CONELEC) has announced plans to carry out 226 new hydropower projects from 2012 to 2020, requiring an investment of approximately $10.9 billion. These plants have the potential to produce 11,818 MW of electricity, while demand currently hovers at 3,768 MW. Ecuador’s government said it plans to invest $605 million in 2012 to construct eight hydroelectric plants, part of a $5 billion plan to double the Andean country’s generating capacity by the end of 2012.
In recent years, Ecuador has been striving to harness the power of green technology to generate electricity in a cleaner way. The country has looked to geothermal, wind, and solar options, making use of its natural resources beyond hydropower. These initiatives have helped the country in its mission to reduce carbon emissions while diversifying energy products. In parallel, the government has set targets to ensure that 99% of Ecuadoreans have access to electricity, and several state projects are in the works to achieve these aims. To date, 94.8% of the population has access to electricity, with the remaining 5.2% mainly living in mountainous or hard-to-reach areas, where supply is difficult to regulate.
The majority of Ecuador’s electricity is generated from its rivers, but wind, solar, and thermal energy are becoming new alternatives to the traditional generation methods. Although 42% of energy is still produced through non-renewable methods, Ecuador is working to expand production of electricity through more environmentally conscious activities.
In 2011, Ecuador produced 21,561 GWh of energy, 50.1% of which was hydraulic production. Approximately 0.05 GWh was produced through solar energy, and an additional 3.46 GWh was generated with wind. The relatively new thermal plants contributed 1.2% of the total electricity supply, or 263 GWh. Despite the increased domestic production, Ecuador imported 6% of its energy needs in 2011, and plans to decrease that figure in the coming years.
In terms of electricity costs, the average price for residential consumption weighed in at around $0.09 per kWh, and public lighting cost $0.10. Meanwhile, commercial energy consumers were charged an average of $0.07.
Consumption per capita in 2011 registered 1,021 kW per home. Nationwide domestic demand for energy was approximately 15,100 GWh. The authorities reported a 10% loss on distribution.
The Ministry of Electricity and Renewable Energy aims to serve Ecuador’s people by forming a national policy concerning electricity supply. The Ministry also manages projects, promoting a suitable and successful model on the basis of the knowledge contributed by people engaged in the field of energy sustainability. Some of the main ongoing objectives of the entity are to plan the energy matrix, increase coverage, strengthen all state institutions, ensure reliability and quality, promote the efficient use of energy, and enhance regional integration. In that vein, the Ministry is responsible for four main projects in 2012, which target these areas and seek
to improve the overall functionality of the sector: the Rural and Marginal Urban Electrification Program, the Plan to Reduce Electricity Energy Losses, the Improvement of Power Distribution Plan, and the establishment of the Integrated System for Managing Electrical Distribution, with investments of $54.9 million, $24.9 million, $20.1 million, and $11 million, respectively.
State company CELEC is responsible for the generation and distribution of 85% of Ecuador’s electricity supply. In 2012, the company intends to complete work on eight new hydroelectric plants, as well as a wind farm and geothermal power plant. “These projects fit perfectly under CELEC EP’s green policies, and will make the electricity generation process in our country cleaner,” Eduardo Barredo, General Manager of CELEC, told TBY. “Most of these hydroelectric plants are being developed jointly with Chinese state-owned enterprises… Russian and Brazilian banks are also involved with the financing of a number of our projects.”
One project being financed largely by Chinese investors is Coca Codo Sinclair, which will have the capacity to produce 1,500 MW and required an investment of $1.7 billion from the Chinese side. The government of Ecuador supplied the remaining $300 million for the project over 2010-2011. The project currently employs over 2,000 workers of various qualifications. The entire operation falls closely in line with the government’s larger agenda. Luciano Cepeda, General Manager of the project, explained to TBY that “Coca Codo Sinclair is the largest hydroelectric project in Ecuador, and will have one of the lowest levels of environmental impact in the entire country.”
With its 11.5% market share, Centrosur has also worked to be both environmentally friendly and beneficial to rural communities. To solve the coverage issues, Centrosur is installing a series of solar panels, 300 of which were installed in 2011. “By mid-May 2012, we will have installed 2,200 more panels, establishing a total of 2,500 panels dedicated to producing photovoltaic energy,” Carlos Delgado, Executive President of Centrosur, told TBY.
These boosts to the country’s electricity supply are geared toward reducing the amount of power the country imports on a yearly basis. However, if production goes as planned, Ecuador will have the opportunity to export its electricity to neighboring Colombia and Peru, as part of a transnational corridor spanning north to south. CELEC is reinforcing the country’s infrastructure to ensure that Quito and Guayaquil can handle the huge amounts of electricity that will pass through the country en route to international markets. The project is currently in the tendering stage. “We estimate the cost of infrastructure for Ecuador to be $400 million, and we expect it to be ready in about two years,” Barredo from CELEC explained. “Then, we will begin to work on interconnection infrastructure between the countries.”
Once connected, Coca Codo Sinclair may become the main provider of electricity for a larger network of South Americans. By the time its project is fully realized, “we expect to have an energy surplus that could enable us to export energy during the peak production months to neighboring countries such as Peru and Colombia,” Cepeda from Coca Codo Sinclair concluded.
© The Business Year