Energy & Mining

Something in the Water

Hydro

With plans to double hydroelectric power production over the coming decade, Ecuador anticipates an increase in grid capacity to alleviate supply deficits and attract more investment in mining.

Each year, Ecuadoreans consume nearly 2,000 kWh of electricity per capita, and that number is rising steadily. Coupling that trend with the growing interest in Ecuador’s mining industry means the country could be looking at a serious supply deficit for electricity. In response to this, the government is investing heavily in developing hydroelectricity infrastructure, which currently represents around 63% of the country’s generation matrix. Because Ecuador wants 93% of its electricity needs to be covered by hydroelectric power by 2016, there are eight ongoing construction projects in the field of hydroelectricity and hundreds more in the works.

SUPPLY & DEMAND

Currently, six state-owned firms make up Ecuador’s power generation sector, while the transmission system is operated by a single state-owned company, Transelectric. Nearly 23 TW/h of electricity were produced in 2012, a marked rise from 2011. Hydroelectricity provides a good alternative to the country’s reliance on oil; however, the country is still susceptible to seasonal power shortages during droughts and the dry season (October-March). The upcoming hydroelectric projects are looking to help add to the supply and, hopefully, even produce a surplus to export to Ecuador’s neighbors. The government is currently trying to establish a connection to Colombia and Peru, which have different hydrological cycles, in order to balance supply. These connections could alsobe used as export outlets once the new generation capacity starts up. “In the future, the country will have a strong hydroelectric component,” Ecuadorean Minister of Coordination of the Strategic Sectors Jorge Glas Espinel estimates. “By 2016 we will double the installed capacity of electric generation across the whole territory. We want to become a center for the export of renewable energy. With all the projects, Ecuador won’t even use 30% of its hydroelectric potential.”

UNTAPPED POTENTIAL

In addition to supplying electricity for homes and businesses, one of the main drivers behind Ecuador’s push toward increased power generation is to provide the mining industry with the electricity it needs to operate. Ecuador has several deposits of precious metals that have yet to be exploited, and improving the electricity supply could help encourage further investment and development in the mining industry. Another aim is to reduce the country’s dependence on diesel and expand the country’s potential in the green energy sector. With over 2,000 rivers and streams, hydroelectricity seems like the smart choice for Ecuador’s future power generation requirements.

COCA CODO SINCLAIR

The Coca Codo Sinclair Hydroelectric Plant, funded by Chinese firm Sinohydro Ecuador, is the largest hydroelectric project in Ecuador, currently being constructed at a cost of $2 billion. The project is aiming for completion between 2015 and 2016, at which time it should produce an estimated 8,700 MW/h and alone supply over 40% of the country’s electricity needs. The bringing online of Coca Codo Sinclair alone will change the energy matrix of the country, ensuring surplus energy and huge savings in the future. Some analysts estimate that the government could be looking at savings of $450 million or more per year.

OTHERS

Several other dams already exist in the country, such as the recently-constructed Mazar Dam (170 MW), the Daule-Peripa Dam (213 MW), and the current-largest Paute River Dam (1,075 MW). In addition to these and many others, the National Electricity Council (CONELEC) plans to bring onboard 226 more hydropower projects between 2012 and 2020, in total set to cost nearly $11 billion and bring another 12,000 MW in capacity. With all of these projects, Ecuador seems more than well on its way towards its goal of 93% electrification through hydro plants by 2016.

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