Ecuador is one of the few countries in Latin America with a feed-in tariff (FiT) in place, although project development has been slow. The original Ecuadorian FiT, which expired in 2012, featured high rates and mostly benefited solar photovoltaic projects. The country now offers a non-solar FiT, which was open for applications until December 2016.
In Ecuador, the Ministry of Electricity and Renewable Energy (MEER) oversees renewable energy policy and planning. In 2015, an act was published establishing the Public Electric Power Service, which will oversee the country’s power sector. The law also established the National Electricity Board as the Agency for Regulation and Control of Electricity. While generation is open to private players in Ecuador, transmission is the responsibility of state-owned utility Corporación Eléctrica del Ecuador, and distribution is divided between 11 majority-public companies, in which MEER is the majority shareholder.
In 2015, Ecuador had a total of 6.2GW of installed capacity, with 56% coming from thermal power and one-third from large hydropower. Clean energy, encompassing small hydro, biomass, wind and solar plants, amounted to 11% of total capacity.
In 2011, the government published regulation 004/11, which created and set rates for Ecuador’s first FiT scheme for 15-year contracts. Biomass, geothermal, solar photovoltaic and thermal, wave, tidal and wind plants were included. PV plants received the highest tariffs, at $400/MWh. For projects in the Galapagos Islands, a premium was added. The first FiT programme contracted a total of 645MW from 111 biomass, small hydro, solar and wind projects.
Despite these incentives, project development has been slow and only a few projects have been commissioned so far. In 2013, a second FiT was launched through regulation 001/13. This time, solar PV was not included. It closed to new project applications in December 2016.
Renewable energy developers may also apply for import tax exemption on clean energy equipment and a five-year waiver on income tax. On the transportation side, Ecuador has had a 5% biodiesel blending mandate with conventional diesel since 2013.
The country has set a target to get 90% of its electricity from hydro in 2017 and to raise the proportion of renewable power even higher by 2025. The target is expected to be surpassed thanks to the partial commissioning of the 1.5GW Coca Codo Sinclair hydro project, which will be the largest such plant in the country. Its first phase (750MW) was commissioned in April 2016, while the second phase is expected to come online by the end of the same year. In 2015, 55% of the country’s total 23.8TWh was supplied by hydro plants.
On 13 October 2015, the government of Ecuador submitted its unconditional Intended Nationally Determined Contribution to the United Nations, in which it committed to cutting greenhouse gas (GHG) emissions in the energy sector by 20.4% to 25% below the business-as-usual (BAU) scenario by 2025. Ecuador also committed to a further reduction of GHG emissions in the energy sector to a level between 37.5% and 45.8% below the BAU scenario by 2025. This further reduction is conditional upon availability of resources and international support.
Score summary
Ecuador scored 1.19 in Climatescope 2016, an increase of 0.16 on its tally in 2015. It fell four places to 35th however, and its best performance was on Greenhouse Gas Management Activities Parameter IV.
The country’s score on Enabling Framework Parameter I increased by 0.25 to 1.49, and it took 22nd place, up from 25th the previous year. It has adopted a series of clean energy policies that include a biofuel blending mandate and feed-in tariffs.
On Clean Energy Investment and Climate Financing Parameter II, Ecuador’s score was almost unchanged at 0.45, and it fell ten places to 40th. No new investment was recorded, which stands in contrast to $346m over the preceding four years.
Its score on Low-Carbon Business & Clean Energy Value Chains Parameter III was unchanged at 1.04, yet the country fell six places to 45th, a relatively poor performance that reflected, among things, a lack of service companies active in the country.
On Parameter IV, Ecuador’s score increased by 0.45 to 2.04, placing it 17th, a performance that was partly influenced by the introduction of a GHG emissions reduction target.