Power policy

The September 2021 update of the Electricity Master Plan of Ecuador proposed a significant expansion of the generation park by more than 6,000 megawatts by 2031. According to the plan’s annex, these new investments will not be made if they are not from clean energies (such as renewables and gas).

In August 2021, the government also launched a tender for solar-plus-storage in the Galapagos Islands, aiming to reduce reliance on diesel generation. There are four sub-blocks with the capacity of 150 megawatts, 200 megawatts, 120 megawatts and 30 megawatts.

An 100% income tax exemption is provided for new and productive investments that engage in renewable energy including bioenergy or energy to from biomass.

Power prices and costs

Average electricity prices in 2021 were similar to those in 2020. Since 2007, the government has issued a benefit called the dignity rate subsidy for residential consumers who have an average monthly consumption of less than half the average rate for the rest of the country.

Power market

The Ministry of Electricity and Renewable Energy (MEER) oversees renewable energy policy and planning. In 2015, the Act Establishing the Public Electric Power Service (LOSPEE) was passed, which governs Ecuador’s power sector. Under this law, the National Electricity Board (CONELEC) became the Agency for Regulation and Control of Electricity (ARCONEL). However, in May 2020, Decree 1036 established the merger of the Agency for Regulation and Control of Hydrocarbons, the Agency for Regulation and Control of Mining and the ARCONEL under the Agency for Regulation and Control of Energy and Non-Renewable Natural Resources (ARCERNNR).

While generation is open to private players in Ecuador with 61 companies in 2021, the state-owned company National Corporation of Electricity (CNEL) is responsible for more than 86% of generation. Transmission is under the responsibility of state-owned CELEC EP Transelectric and is expected to be expanded until 2025 as part of the National Transmission Expansion Plan.

The provision of electricity service in Ecuador is carried out through nine electric companies and the National Corporation of Electricity CNEL EP with its 11 business units, which cover a service area of 256,423 square kilometers.

Doing business and barriers

Ecuador faces barriers to the deployment of more renewable generation due to characteristics of its power market. A combination of very low electricity tariffs, fossil fuel subsidies for electricity generation and low power demand growth creates a challenging environment for project developers. There is a history of protests and roadblocks whenever fuel subsidies are diminished.

Although the peak demand grows steadily every year, the country is able to meet peak power demand from its hydro capacity alone.

EV market

Sales of electric vehicles more than tripled from 2020 to 2021, but the absolute figure is still very small, from 106 to 378, representing less than 1% of the annual sales. Further, with cuts in the price of gasoline and diesel in 2022, demand for internal combustion engine (ICE) vehicles is likely to remain stable.

EV policy

With the passage of the Organic Law of Economic Development and Fiscal Sustainability in 2021, no vehicle with low or zero emissions in the country will have to pay value-added tax (VAT) or import tax.

Buildings market

The government has yet to implement any substantive policy support in this sector and the low-carbon heat market remains at an early stage

Buildings policy

There are no specific laws.