Energy & Mining

Pylon the Power

Electricity

The bulk of Ecuador's power generation comes from its hydroelectric network, although the government has been looking to diversify toward alternative energy sources.

The regime law of the Electricity Sector, LRSE, of October 1996, set out Ecuador’s new legal framework. The Ministry of Electricity and Renewable Energy implements electricity sector policy formulated by the Presidency. Meanwhile, the Minister chairs CONELEC, the National Electricity Council, which is Ecuador’s electricity regulator, responsible, too, for planning the development of the sector.

The Ministry for Coordination of Strategic Sectors (CENACE) regulates the purchase and sale of electricity for wholesale markets and retailers. It is tasked with ensuring adequate electricity supply, especially at peak times. CONELEC is empowered to issue regulations that affect CENACE itself, as well as generators, auto-producers, transmission, distribution, and all consumers of the regulated electricity sector. Six state-owned firms comprise Ecuador’s power generation sector, while the transmission system is operated by state-owned company Transelectric.

Ecuador’s urban electrification rate is at roughly 90% according to CONELEC. Yet, the International Energy Agency (IEA) claims that over a million people, mostly in rural areas—roughly 8% of the population—lack electricity supply. CONELEC indicates that residential users account for approximately one-third of electricity demand, closely followed by the industrial sector.

Electricity theft remains a serious problem in Ecuador. Electricity Minister Esteban Albornoz observed that losses, at around 22% in 2007, had been reduced to 18% currently. However, annual losses stand at around $200 million, “which means that distributors bill $800 million when what they ought to bill is $1 billion.” Tougher legislation to curb theft is reportedly in the pipeline.

Ecuador, a minor net importer of electricity, has transmission grid interconnections with Colombia and Peru. In 2012, it produced 16.9 billion kWh of electricity, ranking 75th in the world. To give some idea of scale, China, in first place, generated 4,604 billion kWh in 2012. In the 2000-2012 period, Ecuadorean production peaked at 77 billion kWh in 2004, the year that consumption peaked at 70 billion kWh. Meanwhile, in 2012, Ecuador consumed 14.9 billion kWh.

Hydroelectricity accounts for around 61% of overall production. Another prominent source of electricity supply is thermal power plants, predominantly using oil as an input. Alternative energy sources, such as wind and solar power, are in their infancy, although ambitious plans are afoot. The government has published a wind atlas that points to a 884 MW of wind potential nationwide. The prime location is at high altitude along the western edge of the Andes between the Amazon region and Pacific coast. The province of Loja has the largest wind potential of around 520 MW. In fact, it is already home to the Villonaco facility, Ecuador’s first utility scale onshore wind farm, which came online early in 2013 with a capacity of 16.5 MW at 2,700 meters above sea level. Six other provinces where hats are likely to fly off heads are Carchi, Imbabura, Pichincha, Bolí­var, Chimborazo, Cañar, and Azuay.

Geothermal energy is also under the spotlight for the future. Local power company Celec has isolated several prospective areas for the development of Ecuador’s geothermal program, namely Alcedo (150 MW), Chacana (318 MW), Chachimbiro (113 MW), Chalpatán (51 MW), Chalupas (283 MW), and Tufino (138 MW). The priority developments are Chacana in the provinces of Napo and Pichincha, and Chachimbiro and Tufino in the Imbabura province. The former may come online in 2017, with the latter to follow in 2018.

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