A key private-sector investment to increase energy security and reduce vulnerabilities in the electricity supply based on hydropower amidst climate impacts.

QUITO, Ecuador (August 28, 2025) – The Ecuadorian Ministry of Environment and Water and Energy has authorized 643 MW of distributed energy projects, an important step towards strengthening national electricity flows in the grid and broaden the country’s energy mix. In announcing the approvals, Minister Inés María Manzano stated that the approvals included a number of photovoltaic (PV) arrays and hydroelectric plants developed by private industry.

The projects are part of the government of Ecuador’s strategy to address energy shortages, and increase phyical investments in electric production that are not reliant on hydropower, which comprises 72% of national generating capacity. In 2024, severe drought conditions contributed to a national energy crisis leading to widespread and at times prolonged electric failures upwards of fourteen hours each day, in some regions5. Faced with the crisis the National Assembly approved the Organic Law to Promote Private Initiative in Energy Generatioin in October 2024, aimed at reducing the regulatory burden associated with investing in renewable energy in Ecuador and encouraging private investment in renewables through streamlined government process.

The project scope and allocations
Of the total allowable size, 179.1 MW is designated for distributed generation projects that will provide power to the grid under regulated contracts. The remaining 464.6 MW is composed of self-generation projects, which are intended to power the company and can sell surplus12. The companies with enabler certificates have 18 months to conduct the feasibility studies, construct facilities and put the project in operation.

The context and the national energy objectives
Currently, Ecuador has a distributed PV capacity of approximately 100 MW which is steadily increasing by residential, commercial, and industrial users. The new projects are consistent with the government’s investment portfolio for 2025–2030, which spans the creation of almost 8,000 MG of generation capacity through renewables, such as solar, wind, geothermal and hydropower. Minister Manzano reemphasized public-private partnerships in a call for “exponential growth” in private investment to establish a national energy balance.

Industry and International Cooperation
The authorization process has also underscored Ecuador’s commitment to using international collaboration. Chinese companies and European companies have both been instrumental in the building of energy infrastructure. Spanish consortium Cox Group recently won contracts for 600 MWs of solar PV projects, coupled with energy storage, in Ecuador and demonstrates realities of cross-border investment.

Quotes
Inés María Manzano, Minister, said, “We must continue to grow massively to achieve the energy equilibrium that the country so badly needs. We are committed to streamlining the process they have to follow and shortening, for the benefit of the energy sector, the term of permits.”

Economist María Hidalgo said, “If we are creating regulatory and legal frameworks, it is important to assure investor confidence in order to avoid situations like the blackouts.”

Next Steps
Companies will proceed with feasibility studies and financing arrangements, with construction expected to begin in 2026. The projects are projected to create thousands of jobs and significantly reduce grid vulnerability during droughts.

About Ecuador’s Energy Sector
Ecuador’s electricity matrix is predominantly hydropower-based, but climate vulnerabilities have accelerated diversification efforts. The government aims to integrate nuclear energy by 2030 and expand solar and wind capacity through public-private partnerships.