Drought and the Hydro Energy Crisis in Ecuador: What Can Be Done?

 

     Ecuador, like many other places around the globe, is experiencing a drought that is severely lowering reservoir levels and hydropower output. In Ecuador’s case, hydroelectricity is the source of 75% of its power. In hindsight, we can now say that Ecuador is overleveraged in hydropower. Blackouts have been plaguing the South American nation for several months. As shown below, the remainder of Ecuador’s electricity is derived from oil (20.7%), natural gas (3.1%), biofuels (1.2%), and wind & solar (< 0.5% combined). The other graphs form the IEA and Our World in Data show other energy and electricity stats and trends for the country.

     Hours of forced blackouts daily, government pleas to reduce power consumption, and the country declaring a 60-day state of emergency back in May, have been the results of the drought and the powering down of hydro. Businesses that need power for necessities like refrigeration have been affected. The situation has improved since blackouts of up to 8 hours long were common. The problem is, however, expected to continue off and on for years to come. Ecuador needs to make some energy investment decisions.

     Like Southeast Asia and the American West, Ecuador gets most of its rain in a short period each year. The American West has its rainy season as fall and winter snow. In the past, reliable rainy seasons have led to adequate water levels in these regions. But weather patterns change. The reasons for the changes in weather patterns vary but one December 2017 paper in Nature Scientific Reports gives its conclusion in its title: Precipitation variability increases in a warmer climate. The graphic below plots the global precipitation variability geospatial data. Weather variability makes hydropower more vulnerable to events that decrease its output

     A May 2024 article in Wired describes the energy dilemma in Ecuador and notes that drops in hydro output have been occurring globally:

“Ecuador’s situation indicates what could happen in other regions that are heavily reliant on hydropower—like China, Brazil, and parts of the US, like Washington state—if drought conditions don’t improve.”

     Apparently, Ecuador is not used to drought. The area usually has sufficient rainfall, periods of heavy rainfall, and fog. Thus, the droughts and drops in hydropower output were not expected.

     But there are other reasons for drops in hydropower output that are likely to be underappreciated, namely sedimentation and erosion, as Wired reports:

“Other factors have also reduced the function of Ecuador’s power plants. “There’s also increased erosion or sedimentation in the river that then gets into the turbines and decreases their efficiency,” says Michel, with deforestation and forest fires both culprits. In Ecuador, some of the recent outages have been because of the Coca Codo Sinclair dam needing to have sediment removed from its turbine inputs.”

 

Strategies for Making Ecuador’s Electricity System More Reliable and Resilient

     In the Wired article, David Michel, a senior fellow in the Global Food and Water Security Program at the Center for Strategic and International Studies, gives some strategies for alleviating the problem. First, he recommends better local water catchment and conservation, rainwater harvesting and storage for things like agriculture. Next, he notes that the country is in need of power grid upgrades that can increase its ability to deal with demand fluctuations while conserving overall power use. This includes things like adding transmission and modernizing the grid. Next, he recommends increased investment in and subsidization of renewables, presumably wind and solar, but is unclear how they could replace baseload hydropower. Finally, he recommends improvements in both energy conservation and water conservation. One potential strategy he does not mention is to increase natural gas usage. Another strategy that overlaps is the diversification of the energy system.

     In a CNN article in June, Ecuador’s Public Infrastructure Minister squarely blamed lack of investment and inadequate maintenance for the outages:

“The outages we had today were due to a lack of investment in maintenance, new electrical transmission, and the protection of the electrical transmission infrastructure,” Public Infrastructure Minister Roberto Luque told a news conference on Wednesday.

     Fast forward to now, late October 2024, and the outages, though shorter now, are having an effect on the economy. Bloomberg reports that chronic underinvestment in Ecuador’s oil, hydro, and solar potential, all of which are significant, is the result of government control and restrictions on private investment:

“A new constitution in 2008 put electricity under government control, blocking most private investment in the industry. Ecuador wagered heavily on hydroelectric power, relying on it to generate more than 70% {now closer to 80%} of its electricity, leaving it vulnerable in drier weather.”

     The country’s current president, Daniel Noboa, has asked Congress to remove the restrictions on private energy investment. This is an important step. Elected to an abbreviated term to solve a political crisis, Nobia is very busy battling criminal gangs in parts of the country. The energy crisis is expected to lower this year’s GDP in the struggling economy by 0.3% Apparently, several thermal power plants, that presumably burn oil, need maintenance. A Turkish power ship, that also burns oil, has been deployed to help with the crisis as an emergency measure. The ability to import power from Columbia and Peru is hampered by the same drought which is lower those countries’ hydropower output as well. The lack of LNG infrastructure is another factor. It would be a wise investment to replace the need to burn high emissions fuel oil in a very inefficient manner.

     Fortunately, Ecuador is now investing in new LNG infrastructure including an LNG ship-receiving terminal (Pacific Terminal), regasification systems, a natural gas power plant, and a “100km-long (62mi) gas pipeline to connect the Monteverde plant with the city of Guayaquil, Ecuador's main port.”  The power plant is expected to power the country’s shrimp, cement, glass, plastic, and other industries as well as providing power for residents and businesses.

     The Pacific Terminal project is expected to save money in the long run as its’ fuel will be much cheaper and cleaner than oil:

“Pacific Terminal also aims to provide natural gas to thermoelectric plants. According to the firm, replacing diesel and fuel with natural gas would save privately owned industries in the country around $500mn/year.”

     Ecuador does produce some domestic natural gas, but not much. It is mostly from the offshore Amistad Field and natural gas produced with the country’s oil in the inland Amazon region. Ecuador is South America’s 5^th largest oil producer and is a net oil exporter. It exported about 74% of its oil in 2020 and almost all of it goes to the United States. Oil exports make up half of the country’s export earnings. The country is planning to offer offshore blocks to private companies for potential natural gas production in shallow and deep waters of the Gulf of Guayaquil.

     The Amistad Field produces offshore natural gas, but production has been declining. Spanish company Repsol made a gas discovery in the south of the country in 2020 that is expected to have reserves of 1.4 TCF. That offers a domestic source of as for the country that could help with power needs in time. Most natural gas used domestically in Ecuador is imported, so there is a need to develop domestic gas.

     An article in Energy Circle gives strategies now being developed: expansion of natural gas infrastructure, incentives for domestic production, development of new gas fields, and conversion of power plants from oil to natural gas. The article also points out a regional cooperation agreement between Ecuador and the Dominican Republic to work together to revive the Amistad natural gas field for the benefit of both nations. This is probably a good idea.

     Ecuador has significant untapped renewable potential, Abundant sunlight, steady coastal winds, and numerous untapped hydropower possibilities, along with oil resources, make the country energy-rich. Renewables will require significant investment, but these will be useful investments in reasonable amounts since upfront investments in renewables projects are much higher compared to natural gas investments. A solar power plant capable of producing 200MW (or is that capacity, the article made it sound like generation, so I am not sure), a 200MW wind farm, and a Chinese-invested 110MW solar plant are in progress.

      Ecuador does not export natural gas and consumes what it produces. Natural gas production as well as oil production has dropped in recent years. As noted below in the EIA graph, natural gas production peaked in 2014 at over 20 BCF and by 2021 was down to half of that rate. As noted, the Amistad field is an offshore field. Its depletion has resulted in lower natural gas output in the country.

 

References:

 

Ecuador Is Literally Powerless in the Face of Drought. Hannah Singleton. Wired. May 30, 2024. Ecuador Is Literally Powerless in the Face of Drought | WIRED

Ecuador Goes Dark as Power Crisis Punishes Economy. Stephan Kueffner. Bloomberg. October 17, 2024. Ecuador Goes Dark as Power Crisis Punishes Economy (yahoo.com)

Ecuador hit by nationwide blackout, leaving 17 million in the dark. Abel Alvarado, Tara John and Ana María Cañizares, CNN. June 20, 2024. Ecuador hit by nationwide blackout, leaving 17 million in the dark | CNN

Ecuador: Energy Country Profile. Hannah Ritchie and Max Roser. Ecuador: Energy Country Profile - Our World in Data

Country Analysis Brief: Ecuador. Last Updated: July 20, 2023. Next Update: July 2025. Energy Information Administration. Country Analysis Brief: Ecuador (eia.gov)

Ecuador. IEA 50. Ecuador - Countries & Regions - IEA

Precipitation variability increases in a warmer climate. Angeline G. Pendergrass, Reto Knutti, Flavio Lehner, Clara Deser & Benjamin M. Sanderson. Scientific Reports volume 7, Article number: 17966 (December 2017). Precipitation variability increases in a warmer climate | Scientific Reports (nature.com)

Problems persist at Coca Codo Sinclair but Mazar-Paute hydro plants are approaching full production. Cuenca High Life. May 24, 2024. Problems persist at Coca Codo Sinclair but Mazar-Paute hydro plants are approaching full production - CuencaHighLife

Ecuador authorizes LNG import terminal. Argus Media. Alberto Araujo. October 15, 2024. Ecuador authorizes LNG import terminal | Latest Market News (argusmedia.com)

Ecuador’s Energy Market, and It’s Current Demand for Natural Gas. The Energy Circle. IN-VR. 2023. Energy Circle