Ecuador approves bill to boost private investment in the energy sector

The Ecuadorian National Assembly has approved the draft “Organic Law to Promote Private Initiative in Electricity Generation”, to promote private investment in the energy sector. The law creates a legal framework for long-term investments by facilitating the development and implementation of energy projects from various renewable energy sources and technologies. According to it, thermal projects will be required to present transition plans towards cleaner technologies to reduce their environmental impact, while hybrid projects are encouraged to promote a sustainable transition. Private companies, which had to take part in public tenders for power projects of more than 10 MW, will now be allowed to develop power projects up to 100 MW by submitting permits to the Ministry of Energy; in addition, existing private power projects may request a review of in their permits to increase their capacity to 100 MW under the new criteria.

Power companies will also be allowed to import natural gas for self-consumption to replace the use of other hydrocarbons in the productive activities in the country. Decentralized autonomous governments will be required to implement waste management systems to generate energy from its garbage processing. In addition, the Ministry of Energy and national oil and gas company Petroecuador will call for tenders for the exploitation and repowering projects of the identified gas fields, within a maximum period of 90 days.

Ecuador has been facing an energy emergency due to low hydropower generation, with power cuts of up to 14 hours a day. Total capacity in the country reached 8.9 GW at the end of 2023, including 58% of hydro, 31% of oil and 8% of gas. Hydropower has been accounting for more than 70% of the power mix since 2017 (75% in 2022).