Ecuador overhauls electricity regulation to accelerate private generation and create autonomous energy districts

The decree streamlines authorization procedures for renewable and transitional generation projects up to 100 MW, granting priority treatment for projects incorporating storage systems. Private companies may now propose storage projects not initially included in the Master Electricity Plan if they demonstrate technical, economic, financial and environmental viability. The regulation assigns first-order payment priority to private developers executing generation, transmission, distribution, storage or complementary service projects, with distributors required to establish trusts funded by user collections to guarantee payments.

The reform establishes Autonomous Energy Districts as a legal framework allowing private, mixed-capital or social economy entities to develop integrated energy solutions within authorized zones for up to 40 years. District operators may install and operate generation plants for self-supply, manage local grid infrastructure, incorporate storage systems, implement electric vehicle charging networks, sell surplus electricity and purchase energy during generation deficits. Districts connected to the National Interconnected System must maintain commercial metering, sign connection contracts and pay applicable transmission charges. Districts relying exclusively on local generation face title revocation if grid withdrawals exceed surplus injections for two consecutive years.

Regulated consumers, large consumers and self-generators gain authorization to install generation systems for self-supply and inject electricity into distribution networks under conditions set by ARCONEL. Self-generators may produce unlimited surplus energy for sale to regulated demand or large consumers. Consumers installing self-supply systems must pay charges for distribution or transmission network use and availability, with authorization granted by the relevant distributor or transmitter for regulated consumers and by the competent authority for large consumers.

During energy deficit periods, rationing or grid problems, CENACE may order disconnection of high-voltage consumers, who must maintain generation systems covering 100 percent of their energy and power demand. New mining and petroleum projects must incorporate self-generation or self-supply solutions matching their demand levels, with high-voltage clients subject to this obligation receiving an 18-month implementation deadline. The regulation entered force September 29 as Ecuador implements weekly demand reductions for 185 high-voltage consumers and extends restrictions to medium-voltage clients, targeting 500 MW of load reduction while reservoir levels decline during the dry season.