Ecuador is grappling with a changing climate that is dramatically affecting its energy sector. The Andean nation has long relied on hydropower, a once-reliable source of clean energy that leveraged the country’s abundant water resources.
However, severe droughts in recent years have exposed the limitations of this dependency, leading to blackouts, public unrest, and growing calls for reform. The Ecuadorian government is at a crossroads: adapt by diversifying its energy mix or continue to face the consequences of an unreliable hydropower system.
The hydropower conundrum
Hydropower has always been the backbone of Ecuador’s energy policy. Approximately 80% of the country’s electricity is generated from hydropower, which was once seen as both economically viable and environmentally sustainable. Ecuador’s mountainous terrain, crisscrossed with rivers and high-altitude reservoirs, made hydropower an obvious choice.
However, recent environmental changes have shifted this dynamic. Ecuador has experienced prolonged droughts, reducing water levels in critical reservoirs and impacting power generation. Reservoirs that once brimmed with water now face alarmingly low levels, unable to generate enough energy to meet demand.
This year’s severe drought, exacerbated by global climate shifts, has led to unprecedented power cuts, leaving millions without electricity for hours. Entire cities have plunged into darkness, and industrial activity has ground to a halt.
While hydropower is renewable, it is inherently dependent on steady, predictable rainfall. Unfortunately, in the face of changing climate patterns, reliable rainfall has become rare. Seasonal fluctuations have become harder to predict, and water scarcity has undermined Ecuador’s ability to maintain a stable energy supply.
Economic consequences
The blackouts triggered by unreliable hydropower have significant ripple effects across Ecuador. Economic output has been stifled by sporadic power availability, with industries forced to halt production during electricity cuts. Power outages have led to economic slowdowns that affect employment and national GDP.
The instability has also affected public services, including healthcare and education. Hospitals have reported difficulties maintaining care during blackouts, with emergency procedures often delayed or cancelled. Educational institutions, especially in rural areas, have also suffered; students struggle to follow online classes or study during the nighttime.
This energy crisis has triggered public protests. Frustration has been boiling over as citizens face increasing difficulties in managing their daily lives. What began as local protests has grown into a nationwide movement pushing for systemic change.
Given these disruptions, many voices in Ecuador are calling for a diversified energy strategy. Environmental experts, business leaders, and activists alike urge the government to reconsider its over-reliance on hydropower and explore alternative energy sources.
Diversification could take many forms
Solar and wind energy are attractive alternatives, with significant solar potential in Ecuador’s coastal and Andean regions. Advances in technology have made solar panels more efficient, and consistent sun exposure could make solar a sustainable energy source. Wind energy also holds promise, especially in coastal areas and highland plateaus with strong wind currents.
Geothermal energy is another viable option. Ecuador, situated on the Pacific Ring of Fire, has geothermal activity that could provide a stable, clean energy source. Studies suggest geothermal reserves could replace a significant portion of hydropower generation.
However, these changes require financial investment and political will. Building infrastructure for wind turbines or solar farms means overcoming bureaucratic hurdles and securing funding. The government, already dealing with fiscal challenges, must balance these investments with other pressing needs.
The role of fossil fuels
In Ecuador’s energy matrix, fossil fuels still play a huge role, mainly as a backup during hydropower failures. During the recent crisis, thermal power plants were used for emergency power. However, these are not sustainable long-term solutions due to environmental concerns and Ecuador’s climate goals.
Fossil fuel reliance also poses economic risks, as global oil and gas price fluctuations can increase energy costs, straining the economy. A pivot back to fossil fuels would undermine Ecuador’s carbon reduction efforts and global climate commitments.
Ecuador faces significant obstacles in energy diversification, primarily financing. The economy, battered by low oil prices, political instability, and the COVID-19 pandemic, leaves the government with limited fiscal space to invest in solar, wind, and geothermal infrastructure.
Public perception also poses challenges; many Ecuadorians view hydropower as a symbol of self-sufficiency. Shifting away from this identity requires educating the public on the risks of hydropower dependency and the benefits of diversification. Engaging local communities and providing incentives are crucial to gaining support for new energy infrastructure.
Regional lessons in energy adaptation
Ecuador is not the only country in Latin America grappling with the effects of climate change on energy systems. The broader region is experiencing similar issues, as prolonged droughts affect countries like Brazil and Colombia that also rely heavily on hydropower. There are lessons Ecuador can learn from its neighbours.
Brazil has diversified its energy mix significantly over the past decade, supplementing hydropower with wind, solar, and bioenergy. These additional streams have provided a buffer during times of drought, reducing the impact of water shortages.
Chile, on the other hand, has aggressively pursued solar energy, taking advantage of the Atacama Desert’s high solar irradiance. Today, Chile is a leader in renewable energy in South America, demonstrating that a coordinated national effort, coupled with international investment, can yield significant rewards in energy resilience. Ecuador could look to Chile as a model for leveraging geographic advantages for a diversified energy approach.
The time has come for Ecuador to rethink its energy strategy. Heavy reliance on hydropower has proven unsustainable in an era of climate uncertainty, and the consequences—frequent blackouts, public discontent, and economic stagnation—are impossible to ignore. Moving towards a diversified energy system is no longer just an option but a necessity.
A multi-pronged approach
Ecuador needs a multi-pronged approach: government incentives for renewable projects, partnerships with private investors, and international cooperation for funds and technology. Educating local communities about the benefits of new energy sources is crucial for successful implementation. Tackling both financial and social aspects is key to overcoming energy insecurity.
International bodies like the World Bank and the Inter-American Development Bank can provide critical funding and expertise. Public-private partnerships are also essential for the capital and innovation needed to drive this transition.
Recent protests and shortages are a wake-up call—Ecuador must diversify to ensure energy stability and sustainable development. By embracing wind, solar, and geothermal energy, Ecuador can build a resilient energy future that benefits both its economy and its people.
Government shows intent
In October 2024, the Ecuadorian National Assembly approved the draft “Organic Law to Promote Private Initiative in Electricity Generation” to encourage 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 using various renewable energy sources and technologies.
Thermal projects will be required to present transition plans toward cleaner technologies to reduce their environmental impact, while hybrid projects are encouraged to promote a sustainable transition.
Private companies, which had to participate 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. Additionally, existing private power projects may request a review of 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 productive activities in the country. Decentralised autonomous governments will be required to implement waste management systems to generate energy from garbage processing.
Furthermore, the Ministry of Energy and the national oil and gas company Petro Ecuador will call for tenders for the exploitation and repowering of identified gas fields, within a maximum period of 90 days.
It is undeniable that the path to a stable, diversified energy future will be challenging, requiring investments and shifts in public perception. However, with proper planning, international support, and a commitment to change, Ecuador can emerge stronger. By diversifying its energy mix, the country can ensure a consistent power supply and establish itself as a leader in the region for sustainable energy practices.