1. Big picture: why Ecuador’s electric system feels “fragile”
Ecuador’s electricity is officially a public service run mainly by the State, with a grid that covers almost the whole country. Most power still comes from large hydroelectric dams, backed up by diesel and gas plants, plus a small but growing amount of solar and wind. (Trade.gov)
That model worked fairly well in wet years. But in 2023–2024, a combination of drought (El Niño), lack of new capacity, and neglected thermal plants led to a serious crisis:
- Rolling blackouts up to 10–14 hours a day in late 2024. (AP News)
- Hydropower, normally ~70–80% of generation, couldn’t meet demand. (Trade.gov)
- The Central Bank estimates losses of about US$2 billion in 2024 from outages alone. (Trade.gov)
Since then, the government has tried to stabilize the system with emergency thermal generation, more imports and new rules, but the basic structure hasn’t changed: big state companies dominate, private renewables are still emerging, and the system remains very sensitive to weather and delays.
2. Who actually runs the system?
You can think of the sector as four main layers: policy, regulation, system operation, and companies.
a) Policy: Ministry of Energy and Mines (MEM)
- The Ministry of Energy and Mines sets national energy policy and planning for the electricity sector.
b) Regulator: ARCONEL / ARCERNNR
- ARCONEL (now within the broader agency ARCERNNR) issues regulations for tariffs, service quality, distribution rules, and how companies must react in a shortage. (elecgalapagos.com.ec)
- In October 2025, ARCONEL approved new rules for operating the grid in deficit conditions and for promoting private non-conventional renewables, explicitly trying to avoid a repeat of the 2024 crisis. (Diario Expreso)
c) System operator: CENACE
- CENACE (Operador Nacional de Electricidad) is the independent system operator. It:
- Runs the Sistema Nacional Interconectado (SNI) – the national high-voltage grid
- Manages the economic dispatch and settlements between generators, distributors and big consumers
- Manages international interconnections with Colombia and Peru. (cenace.gob.ec)
Think of CENACE as the “air traffic control” of power: it doesn’t own plants, but it decides which plants run and how energy flows.
d) Companies: CELEC, CNEL and distributors, plus some private actors
- CELEC EP (Corporación Eléctrica del Ecuador)
- State-owned “holding” responsible for most generation and all transmission (via its Transelectric business unit). (gme-global.com)
- Owns the main hydropower complexes (Paute–Mazar, Coca Codo Sinclair, etc.) and big thermal plants.
- CNEL EP (Corporación Nacional de Electricidad)
- State company that groups 11 regional distribution units, covering much of the country’s low-voltage networks and billing. (I-TRACK)
- Other public/mixed distributors
- Quito, Cuenca and other regions have their own public or mixed utilities, also regulated by ARCONEL. (Scribd)
- Private generators and large consumers
- Private companies can own generation and sign power purchase agreements with big consumers (≥1 MW) or sell into the market under CENACE rules. (I-TRACK)
In numbers: by 2023 around 90% of electricity was still produced by state-owned plants, and private projects have a small but growing share.
3. How the system is built: hydro-heavy, backed by thermal and imports
Generation mix
- In 2024, Ecuador had about 9,255 MW installed capacity:
- ~5,686 MW (61%) from renewables, mostly large hydropower
- ~3,569 MW (39%) from fossil fuels (diesel, fuel oil, gas). (Trade.gov)
- Hydropower provided roughly 78% of actual generation in 2024. (Trade.gov)
The big problem: capacity on paper vs. capacity you can actually use.
- Some thermal plants have been out of service or under-maintained.
- Coca Codo Sinclair, the largest dam, has structural and sediment issues and often can’t deliver its theoretical output. (Financial Times)
Demand and peaks
- Peak demand hit a record 5,110 MW on 7 May 2025, about 90% covered by hydropower that day. (LupaMedia)
- CENACE and Trade.gov estimate demand is growing roughly 360 MW per year, and total consumption has grown ~50% over the last decade. (LupaMedia)
So even though installed capacity looks almost double peak demand, the usable margin is much smaller because of drought risk, equipment problems and plants that are not really available.
Cross-border links
- Ecuador imports and exports power mainly with Colombia and Peru, depending on water levels and prices. During the 2024 crisis, Colombia sharply limited exports, leaving Ecuador more exposed. (AP News)
4. What went wrong in 2023–2024?
Most sources agree on four main causes for the 2024 blackout crisis:
- Drought and El Niño – Reservoirs fell to very low levels, cutting hydropower output.
- Underinvestment and delays – No big new plants came online for years after Coca Codo; projects like Toachi Pilatón were heavily delayed.
- Thermal plants not ready – Much of the thermal fleet was offline or in poor condition just when it was needed most.
- Limited imports – Colombia and Peru also faced low water and limited how much they could export.
The result was nationwide rationing, with scheduled outages up to 14 hours per day in late 2024. (AP News)
5. Supply vs demand now and for the next hot/dry season
What has changed since the worst of 2024?
Key moves in 2025 include:
- New capacity and repairs
- Plan de Estiaje 2025–2026
- Government and CELEC announced a plan to incorporate about 979 MW of additional firm capacity (new thermal plants, rented barges, recovered units) to get through the dry season from September 2025 to around March 2026. (Primicias)
- Peak demand still climbing
- CENACE estimates Ecuador needs roughly 900–921 MW of new capacity by around September 2025 to keep a safe margin. (LupaMedia)
Independent fact-checking by Lupa and Primicias notes that not all the announced 979 MW were actually online on schedule – especially some private thermal contracts (Progen, Austral) that suffered delays or technical issues. (LupaMedia)
How did the 2025 dry season go?
- Hydrological conditions in 2025 have been much better than 2024; key reservoirs like Mazar stayed high. (El Universo)
- The government has repeatedly stated there will be no blackouts in 2025, and as of late October 2025, major media report that rationing has indeed been avoided, thanks to:
- Higher river flows
- Extra thermal generation and rental barges
- Increased imports from Colombia when needed (though at a high fiscal cost). (El Universo)
So for the current 2025–26 estiaje, the risk was real but conditions ended up being more favorable than feared, and the short-term fixes held.
What about the next hot/dry season (2026)?
Looking ahead, the picture is mixed:
- Demand will keep growing, likely above 5.2–5.3 GW at peak. (LupaMedia)
- Some of the new capacity added in 2025 is temporary rental thermal generation, which is expensive and may not all still be in service in late 2026.
- Reservoir levels and Colombian exports will again depend on climate and rainfall, which are becoming less predictable. (Financial Times)
Analysts generally say that Ecuador is less exposed than in 2024, but still vulnerable if:
- Drought is severe
- Some thermal or renewable projects slip again
- Or imports from Colombia/Peru are restricted. (Primicias)
Short version:
- 2025 dry season: mostly under control thanks to better rains + emergency measures.
- 2026 dry season: should be better than 2024, but still not “comfortable” unless planned projects actually get built and maintained.
6. How are private renewables being integrated?
This is where a lot is changing on paper, but more slowly on the ground.
New laws and regulations
- Energy transition program with the IDB:
- Ecuador committed to increase renewable capacity from ~65% in 2023 to 90% by 2030 and to attract more private capital.
- LOCE and LOSPEE reforms (2023–2024):
- Created clearer mechanisms for private generation through auctions and long-term contracts,
- Allowed special authorizations for private participation in transmission and self-generation,
- Created both a long-term regulated market and a short-term market where private generators can sell to large “free” consumers.
- Distributed generation rules:
- ARCONEL issued norms (e.g. 006/23 and 005/24) to allow distributed self-generation and net-style schemes for non-regulated consumers – basically letting big users install their own solar/wind and inject surplus to the grid under clear rules. (arconel.gob.ec)
- October 2025 regulations strengthen both shortage management and incentives for non-conventional renewables (wind, solar, small hydro, biomass). (Diario Expreso)
Projects and reality
- Solar/wind auctions announced since 2020–2023 have moved slowly:
- The Villonaco wind expansion is under construction.
- The large El Aromo solar plant has seen repeated delays and renegotiations. (Trade.gov)
- As of 2025, private investment is still only ~4% of generation investment, very low compared to Latin America’s ~40% average.
- A positive sign: in August 2025, authorities authorized about 643 MW of distributed energy projects (mainly solar) under the new framework – but these still need to be financed and built. (pv magazine International)
So:
- On paper, Ecuador now has a more modern framework that welcomes private renewables.
- In practice, the sector is still dominated by public hydropower and public decisions, and the pace of private solar/wind deployment has been slower than hoped.
7. Other interesting angles
A few more points that often get lost in day-to-day headlines:
- Climate change pressure
- Ecuador’s bet on hydro (up to 90% of generation in some years) now clashes with more irregular rainfall and stronger El Niño/La Niña cycles, making the system more risky just as demand grows. (Financial Times)
- Fiscal cost of “no blackouts”
- Avoiding outages in 2025 has meant importing more power and running expensive diesel/gas plants and rented barges, which raises the real cost of electricity even if retail tariffs stay politically frozen. (Trade.gov)
- Social and political stakes
- The 2024 blackouts damaged the economy and public trust. Future governments will be judged not only on security and jobs, but also on whether the lights stay on during estiaje. (AP News)
8. How to read “risk” as an informed resident
If you want a quick personal checklist each year before dry season:
- Look at reservoir reports for Paute–Mazar and other big complexes (CELEC/CENACE publish them).
- Watch CENACE’s peak demand curves – if new records keep being set without clear new capacity, risk increases. (cenace.gob.ec)
- Track whether announced projects actually start operation (Toachi Pilatón, new thermal blocks, solar/wind auctions).
- Follow ARCONEL/CENACE announcements about emergency rules or rationing scenarios.
