Ecuador's renewable energy potential

In October 2024, Ecuador has faced one of the worst energy crises over the past years, caused by a prolonged and severe dry season that affects the generation of energy in its main hydroelectric power plants. This phenomenon has led to service cut-off of up to 14 hours a day in several provinces, as well as to operational restrictions for the industrial sector, notably affecting the national economy. The situation has called for an urgent need to diversify the country’s energy matrix, which depends largely on hydroelectric sources and is vulnerable to climate changes.

To respond to this crisis, the Organic Law to Encourage Private Initiatives in the Transition towards Non-Conventional Renewable Energy (NCRE) has been declared as urgent by the Ecuadorian State in the economic domain. This law has been promulgated in the Official Registry 673 of October 28, 2024, and it aims at enabling private investment in projects of renewable energy generation, such as solar and wind energy, encouraging the transition towards more sustainable and safe sources.

The abovementioned act contains several strategic goals to attract and facilitate investment in nonconventional renewable energies, the most relevant being described below:

• SIMPLIFIED PERMIT PROCESS: to facilitate investment, the norm establishes an accelerated procedure to obtain the necessary licenses and permits for the development of renewable energy projects.
• PARTICIPATION OF THE PRIVATE SECTOR IN THE ENERGETIC TRANSITION: the law encourages the participation of the private sector for the implementation of sustainable energy solutions, promoting public-private partnerships to enable the transference of technology and knowledge.
  • The import of natural gas is permitted for self-consumption in the productive sector, as well as those that aim at generating electrical energy and substituting the use of other hydrocarbons in productive activities. The regulations and requirements shall be established by the respective regulation and control agency within a period of 30 days from the promulgation of the law.
  • The revision of the generation authorization processes is permitted within the limits of 10 MW to adapt to the new criteria of maximum power (100 MW), as well as for projects that are currently in place with a 10 MW limit.
  • Sectional governments are encouraged to implement waste management systems for energy generation, which could be sold to the National Interconnected System.
  • The change or renewal of the public lighting system is stipulated to LED or solar lighting technology.
  • Private and public banking is encouraged to incorporate funding products and preferential credits aimed at the implementation of energy generation from renewable sources for selfconsumption.
  • The Ministry of Energy and Mines shall convene tender processes for the exploitation and repowering of the natural gas fields.
• PROMOTION OF NONCONVENTIONAL RENEWABLE ENERGY (NCRE): the law aims at increasing the participation of clean and sustainable energies, such as solar and wind energy, reducing the dependency on hydroelectric power plants and fossil fuels for electric generation.

The promulgation of the Organic Law to Encourage Private Initiatives in the Transition towards Renewable Energy sets a turning point in the Ecuadorian energetic sector. Not only does this law respond to the current energetic crisis, but it also establishes the basis for a more diversified and sustainable energetic future, enabling new opportunities for national and international investors, which were unreasonably restricted.

The implementation of renewable energy projects will not only contribute to the energetic stability of the country, but it will also boost economic growth and sustainable development. At EXPERTISE we rely upon a team of professionals with ample experience in public, energy and environmental law, highly trained to provide you with the required advice and accompaniment while protecting the investments and interests of our clients.