Energy Transition in Ecuador: Mitigation Strategies

MITIGATION STRATEGIES

Ecuador is grappling with a significant energy crisis characterized by widespread blackouts and a power supply deficit of approximately 1,080 MW, as reported by the Electric Corporation of Ecuador (CELEC). This crisis stems largely from an unprecedented drought affecting the Amazon basin, which has led to historic lows in reservoir levels. As a result, hydroelectric plants, particularly the Paute Hydroelectric Complex and its Mazar reservoir, are operating at reduced capacity. The Mazar reservoir, which regulates water flow to ensure consistent power generation, is at risk of falling below operational thresholds. This would exacerbate the energy deficit, compromise energy security, and accelerate long-term operational issues like reservoir sedimentation.

The government has initiated emergency measures to mitigate the impact of the crisis. On September 16, CELEC declared a state of emergency, paving the way for expedited contracts to incorporate over 900 MW of additional power.

Figure 1: Power shortages in Ecuador as a result of the energy deficit.
Source: MercoPress.

Turkish Barge

Among the government’s efforts to address the energy crisis is the rental of thermoelectric barges, such as the Turkish barge "Emre Bey," which began operations on September 17, contributing 100 MW to the National Interconnected System (NIS). A second barge with a capacity of 240 MW is projected to be commissioned by April 2025. Additionally, the government has partnered with private sector companies, which have supplied approximately 300 MW of self-generated power to mitigate the impact of power shortages during rationing periods. These emergency measures aim to minimize the economic and social disruptions caused by blackouts, which have already forced many small and medium-sized businesses to cease operations, resulting in widespread job losses and economic setbacks.

Figure 2: Turkish barge supplying energy into the system, Guayaquil-Ecuador.
Source: Mauricio Torres.

Figure 3: Power production of the thermoelectric barge.
Source: Santiago Arcos.

The thermoelectric generating barge’s power output must not fall below 85 MWh. This stipulation ensures that the barge consistently contributes a minimum level of energy to the grid, thereby meeting urgent demands and justifying the investment in its operation. The barge is equipped with six 17.5-liter engines producing 104 MW in an open cycle, plus a steam turbine recovering emissions to generate an additional 6 MW, for a total capacity of 110 MW. According to Karpowership, this is the most cost-effective solution at $0.14 per kWh, compared to $0.18 for natural gas and $0.22 up to $0.68 for Colombian imports. Then the most expensive option is diesel that will cost $0.35. Despite government contracts for over 300 MW, only Karpowership’s units are currently operational.

Although this measure is expected to help alleviate -up to certain extent- the current energy crisis by addressing part of the deficit, it also raises concerns about continued dependence on unsustainable solutions and non-renewable energy sources. This complicates the pressing need to diversify the energy mix, especially by incorporating renewable alternatives and decarbonizing the energy sector -goals shared by many countries. Nonetheless, the immediate focus on tackling drought and ensuring energy security has rightfully become the top priority, making long-term goals seem less urgent.

Tax Exemptions & Special Loans

New investments focused on the shift to non-conventional renewable energy sources, as well as those related to the production, industrialization, transportation, supply, and sale of natural gas and green hydrogen, will be granted a ten-year income tax exemption. Additionally, the government has eliminated taxes on imported generators to address the energy crisis. To further support the situation, special loans are being provided through BanEcuador for the purchase of backup power solutions, including generators and photovoltaic (PV) modules.

Energy Imports

In September, Colombia halted its electricity exports to Ecuador to ensure a stable domestic supply, driven by the shared challenge of droughts caused by the ongoing "El Niño" phenomenon. However, Colombia has now resumed its electricity exports to Ecuador by utilizing thermal power plants fueled by liquid fuels and other energy sources. This was possible due to improvements in Colombia’s own energy situation, including the increased rainfall which has not only replenished reservoirs but also ensured sufficient hydroelectric capacity to meet both domestic demand and export needs. The two nations are linked by four 230 kV transmission lines, along with an additional 138 kV connection, allowing a power transfer up to 450 MW per day accounting for approximately 10 % of Ecuador's daily electricity demand. The main reason for the limited power transfer is due to the power system capacity between both countries which cannot exceed 450 MW per day.

Also, Ecuador and Peru are connected via a 220 kV transmission line, and efforts are underway to strengthen this interconnection with the construction of a 500 kV single-circuit line. This new line, part of the Andean Electrical Interconnection System initiative, will link the Chorrillos Substation in Ecuador to the La Niña Substation in Peru, spanning approximately 635 km. The project includes the construction of the Pasaje Substation in Ecuador and the Piura Nueva Substation in Perú. Supported by a US$125 million loan from the Inter-American Development Bank (IDB), this interconnection project also includes technical training programs aimed at empowering women in the power transmission sector. The infrastructure is expected to enhance net transfer capacities (NTCs) between the two countries, enabling efficient energy trade and supporting regional energy integration.

Figure 4: Ecuadorian Transmission System Network.
Source: Plan de Expansión de la Transmisión,
Ministerio de Energía y Minas-Ecuador, 2024.

Diesel and Gasoline-Fueled Generators

Ecuador's heavy dependence on hydroelectric power and the growing impact of climate change threaten the nation's energy security, endangering the daily operations of businesses, both large and small, which are vital to the economy. In response to energy shortages, many industries rely on fossil-fuel generators, such as those powered by diesel and gasoline. These blackouts, which can last up to 14 hours a day, cause significant economic losses and harm public health. Air pollution from these generators contributes to approximately 7 million premature deaths annually, according to the World Health Organization (WHO), with a disproportionate impact on low- and middle-income countries due to weaker environmental regulations. Quito, the capital of Ecuador located at 2815 m.a.s.l is a prime example, as its residents deal with chronic air pollution from low-quality fuels. Efforts by the local government, including the Secretariat of Environment, have been made to monitor and track pollutants. The findings indicate increased concentrations of nitrogen dioxide (NO2), carbon monoxide (CO), particulate matter (PM), and sulfur dioxide (SO2) particularly when blackouts lasted longer.