Ecuador is one of the few countries in Latin America with a feed-in tariff (FiT) scheme in place, although project development has remained 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 scheme, which is open for applications until 2016.
In Ecuador, 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 published, overseeing regulation and structure of the power sector in Ecuador. Under this law, the National Electricity Board (CONELEC) becomes the Agency for Regulation and Control of Electricity (ARCONEL).
While generation is open to private players in Ecuador, transmission is under the responsibility of state-owned utility Corporación Eléctrica del Ecuador (CELEC EP Transelectric). Distribution is divided between 11 majority-public companies, where MEER is the majority shareholder.
In 2014, Ecuador had a total of 5.4GW of installed capacity, with 43% coming from thermal power and just over one third from large hydropower. Clean energy, encompassing small hydro, biomass, wind and solar plants, amounted to less than 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 and tidal and wind plants were included. Photovoltaic plants received the highest tariffs, at $400/MWh. For projects in the Galapagos Islands, a premium was added. The first FiT program contracted a total of 645MW from 111 projects from biomass, small hydro, solar and wind sources. In spite of the 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, but other technologies may apply. Project applications will be received until 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.
Score Summary
Ecuador’s 1.03 overall 2015 score in Climatescope placed it 31st among all countries and was a two-position improvement from 2014. Ecuador’s 2014 overall score was 0.96.
Ecuador’s year-over-year improvement was based on a notable performance on the Clean Energy Rural Electrification and Growth Rate of Power Demand indicators of Parameter I. It also registered improvement in the Parameter III indicators of Financial Institutions in Clean Energy and Value Chains by Clean Energy Sectors.
On Enabling Framework Parameter I, Ecuador finished 25th in 2015, with a score of 1.24. It was 34th in 2014 on that parameter, with a 1.00.
On Clean Energy Investment and Climate Financing Parameter II, Dominican Republic ranked 30thnd, down 12 positions from the previous year. Its Parameter II scores were 0.46 in 2015 and 0.71 in 2014.
On Low-Carbon Business & Clean Energy Value Chains Parameter III, Ecuador’s 39th-place finish in 2015 was a 10-place improvement from its 2014 rank. The country’s 2015 and 2014 Parameter III scores were 1.04 and 0.72, respectively.
On Greenhouse Gas Management Activities Parameter IV, Ecuador’s 2015 and 2014 Climatescope ratings were identical: 19th place at 1.59.