Private power generation in Ecuador faces regulatory and infrastructure barriers despite government deadline

Private sector attempts to incorporate independent generation capacity are encountering prolonged permit processes and insufficient grid infrastructure to connect new facilities to the national system. The government established the end-of-year deadline as part of efforts to alleviate pressure on Ecuador’s power deficit, but industry representatives warn that obtaining necessary authorizations and completing required procedures can extend for months. Ecuador’s business sector has identified approximately 770 MW of private emergency generation capacity available for deployment, yet the connection framework remains incomplete.

The obstacles reflect structural issues in Ecuador’s electricity infrastructure that President Daniel Noboa himself highlighted during the 2023 presidential campaign, when he linked part of the electric crisis to underinvestment in transmission and distribution networks. These same deficiencies now constitute primary barriers preventing private sector incorporation of new generation capacity. The government’s push for private generation coincides with Ecuador’s entry into the dry season that began September 1, 2026 and extends through March 2027.

Ecuador’s power system depends on hydroelectricity for 76 percent of its generation mix, creating vulnerability during drought periods. The Mazar reservoir, a key component of the Paute-Molino hydroelectric complex with 1,757 MW installed capacity, registered a level of 2,147.35 meters above sea level on August 31, representing an intermediate position 5.65 meters below maximum operating capacity. While this level exceeds the critical threshold of 2,115 meters, the reservoir has shown a declining trend since mid-August.

To preserve water reserves, Ecuador reactivated electricity imports from Colombia on August 5, 2026, purchasing between 280 and 320 MW daily and approaching the 450 MW technical limit of the interconnection. Through August 27, these purchases totaled 52 gigawatt-hours at a cost of USD 26.68 million, averaging USD 0.3855 per kilowatt-hour. Colombian private companies have offered an additional 282 MW through long-term contracts at tariffs starting from USD 0.14 per kilowatt-hour, though this proposal remains under evaluation and would exceed current interconnection capacity.

Ecuador’s plan to add 1,092 MW between 2026 and 2027 has fallen substantially behind schedule, with only 105 MW awarded by August against a requirement for 490 MW of thermal capacity before October 2026. Administrative processes for leasing thermal generation barges of 90 to 110 MW capacity have experienced suspensions or incomplete procedures with the National Public Procurement Service.