ECUADOR. Renewable Energy. Observatory of. in Latin America and The Caribbean

Transcription

1 AUGUST 2011 Observatory of Renewable Energy in Latin America and The Caribbean ECUADOR Final Report Product 1: Renewable Technological Base Line Product 2: State of Art C

2 This document was prepared by the following consultants: EDUARDO ROSERO and BYRON CHILIQUINGA The opinions expressed in this document are those of the author and do not necessarily reflect the views of the sponsoring organizations: the Latin American Energy Organization (OLADE) and the United Nations Industrial Development Organization (UNIDO). Accurate reproduction of information contained in this documentation is authorized, provided the source is acknowledged.

3 CASE OF ECUADOR Product 1: Renewable Technological Base Line Product 2: State of Art 1

4 1 EXECUTIVE SUMMARY This document has two main sections: a) Energy technologies baseline, b) Renewable energy state of the art. The first section examines the energy sector s supply and demand, the sector s consumption, and the electric power grid, based on information provided by OLADE and CONELEC. It is stressed that the consumption within the Ecuadorian energy grid is characterized by a predominance of the oil sector (82% in 2009), thus following the regional trend of substituting firewood, which in 1970 represented 39% and in 2009 registered a 4% share. Moreover, an increase in primary energy supply, especially hydropower, is seen from 1970 (2%) to 2009 (8%) (SIEE-OLADE, 2009). With regard to the evolution of energy consumption by sector, since 1970 it has reported a rapid growth in the transport sector ( %), while the residential sector has remained constant ( %) however, in the last two years ( ) this consumption was significantly reduced by the government's project of replacing incandescent light bulbs with compact fluorescent ones. According to the Ministry of Electricity and Renewable Energy (MEER), after two years of introducing this measure the power for lighting was reduced in peak hours by 2009 in 232 MW (MEER, 2009a). Regarding the renewable energy participation in the electric power grid in 2009, it should be mentioned that there is a predominance of hydraulic components, with 2032 MW of installed capacity, which represents 40.2% of the country's total capacity (5050 MW, CONELEC, 2009a). The wind component is 2.4 MW, with a project in operation on the island of San Cristobal in the Galapagos Islands. It should also be highlighted the contribution of biomass in power generation, 94.5 MW through the process of cogeneration, based on burning bagasse to cover the energy needs of the mills, seeking always to gain an energy surplus for delivery to the National Interconnected System (SNI). Since 2007, the government of Ecuador has intensified the construction of new hydropower plants such as Coca-Codo Sinclair, Toachi Pilatón, Sopladora, Ocaña, etc. (MEER, 2008p). In abstract, the renewable share in the Ecuadorian energy grid includes the following aspects: a) Power generation through using natural resources in hydropower, wind, 2

5 biomass (co-generation) and solar (photovoltaic) projects; b) fuel gas (biogas), using organic waste produced by agribusiness; c) Use of biofuels for transport through the partial substitution of gasoline extra with ethanol - a pilot project in the city of Guayaquil; d) water heating through solar energy to replace the use of power or liquefied petroleum gas. Regarding the legal and institutional framework, this document analyzes existing policies, laws and regulations in order to promote renewable energy in the power and transport sector (biofuels). As regards to the institutional framework, the Ministry of Electricity and Renewable Energy (MEER) is responsible for designing and implementing renewable energy development programs. The National Electricity Council (CONELEC) is responsible for regulating the power sector, it approves concessions for the exploitation of renewable energy resources, and it sets the price for these energies and, in the case of biofuels, the Ministry for the Coordination of Production, Employment and Competitiveness (MCPEC) is the coordinating body for production, through the National Biofuels Council. In addition, the most significant projects by type of technology have been presented considering the following: a) biomass, cogeneration projects using bagasse in the sugar industry, b) wind power, a functional wind farm located in San Cristobal Island; c) biogas for energy use and to reduce greenhouse gas emissions, without using power; d) small hydropower plants, which use the water potential for electricity generation and, e) biofuels through the pilot project in Guayaquil, to introduce the mixture of 5% of anhydrous ethanol with gasoline extra creating "ECOPAIS" fuel, and the pilot project Piñon - Galapagos, to replace the diesel used for power generation in Floreana Island, using pure vegetable oil made out from Jatropha Curcas seeds also known as piñon grown in the province of Manabi. This document also details the lessons learned about renewable energy technologies in Ecuador, highlighting the following: a) There is a preferential tariff for renewable energy projects; b) There is experience in using hydropower resources, and their potential for hydropower generation is very high and could supply all the country's energy demand; 3

6 c) The sugar industry has managed the incentives of the pricing regulations and the support of the international community to build cogeneration projects; and d) There is experience using biofuels through the use, as fuel, of ethanol from sugar cane and piñon oil. In section 2 (state of art), there are two model projects regarding the use of renewable resources: San Cristobal Wind Project and the Bagasse Cogeneration San Carlos Project. Each case describes the objectives, actors, legal, technological, economic, social, environmental aspects, and potential replication. This chapter finishes with the lessons learned, primarily: a) The implementation of these generation projects help diversifying the energy grid; b) Environmental benefits from the use of wind power for power generation lead us to conclude that this is an environment-friendly energy source; c) The experience gained from implementing these projects is transferable to other similar initiatives (replicability); d) The joint work of various worldwide organizations and entities made it possible to achieve the wind power project in the Galapagos Islands (coordination); e) Financial return was not a priority, but the contribution to the environment by reducing oil spills risk was boundless; f) There are environmental benefits from the use of sugarcane bagasse for power generation; g) Commercial supply chains have been consolidated based on using biomass for energy purposes, which is an example for other similar projects; and h) The cogeneration project helped to formalize the institutional payment for the energy produced by renewable sources. 4

7 5 TABLE OF CONTENTS 1 EXECUTIVE SUMMARY ENERGY TECHNOLOGIES BASELINE INTRODUCTION METHODOLOGY GENERAL ECUADORIAN ENERGY INFORMATION Supply Energy sector s demand Energy sector s consumption Electric power grid LEGAL AND INSTITUTIONAL FRAMEWORK OF RENEWABLE ENERGY IN ECUADOR Legal Framework Institutional Framework INFORMATION ABOUT THE MOST RELEVANT RENEWABLE ENERGY FACILITIES Introduction Eco electric Valdez, Bagasse Cogeneration Plant San Carlos Cogeneration IANCEM Cogeneration San Cristobal Wind power project Biogas Codana Project Perlabí Hydropower Project Toachi Pilaton Hydropower Project Coca Codo Sinclair Hydropower Project Mazar Hydropower Project Euro-Solar Program Implementation of 604 Residential solar photovoltaic systems in Communities of the Esmeraldas province Implementation of 619 Residential solar photovoltaic systems in Communities of the Napo province Rural Electrification Program for housing in the Amazon region (PERVA) Rural Electrification Program for housing in the Amazon region (PERVA) LESSONS LEARNED INTRODUCTION METHODOLOGY... 54

8 3.3. SAN CRISTOBAL WIND POWER PROJECT Overview Project Objectives Stakeholder Analysis Legal Aspects Technological Aspects Economic Aspects Social Aspects Environmental Aspects Replicability of the Project Interviews BAGASSE COGENERATION PROJECT Overview Project Objectives Stakeholders Analysis Legal Aspects Technological Aspects Economic Aspects Social Aspects Environmental Aspects Replicability Interviews LESSONS LEARNED REFERENCES GRAPHS Graph 1: Structure of Primary Energy Supply 2009 (SIEE-OLADE, 2009) Graph 2: Evolution of sector energy consumption (SIEE-OLADE, 2009) Graph 3: Sector Energy Consumption by 2009 (SIEE-OLADE 2009) Graph 4: Final Energy Demand by type of energy 2009 (SIEE-OLADE 2009) Graph 5: Installed capacity, power output 2009, CONELEC, 2009a) Graph 6: Installed capacity, power output ( , CONELEC, 2009a) Graph 7: Annual Electric Power Supply Nationwide 2009, CONELEC, 2009b)

9 Graph 8: Total Produced and Imported Energy ( ), CONELEC, 2009b) Graph 9: Annual demand per consumer group, CONELEC, 2009c) Graph 10: Energy consumption per capita ( , CONELEC, 2009d) Graph 11: Project s location on San Cristobal Island (Ergal, 2010) Graph 12: Simplified wind turbine (Gamesa Corporation) Graph 13: Geographic location of Marcelino Maridueña (Source: Sugar Mill San Carlos) Graph 14: Location map within the cogeneration unit s sugar mill (Source: Sugar Mill San Carlos) Graph 15: Schematic diagram of a steam-rankine cycle for biomass cogeneration using a condensing- extraction steam turbine (Source: Sugar Mill San Carlos) Graph 16: Cogeneration process simplified diagram. (Source: Sugar Mill San Carlos) 85 TABLES Table 1: Preferential Renewable Energy Prices in USD $ cts/kwh PICTURES Picture 1: Ground breaking for the San Cristobal wind power project. (Source: consultant) Picture 2: Wind towers sea shipping. (Source: consultant) Picture 3: Wind towers ground shipping. (Source: consutant) Picture 4: Wind turbines foundations builder. (Source: consultant) Picture 5: Installation of wind turbine blades. (Source: consutant) Picture 6: Installation of the nacelles with cranes. (Source: consultant) Picture 7: Opening with the visit of President Rafael Correa. (Source: consultant) Picture 8: Front view of San Cristobal wind farm. (Source: consultant)

10 Picture 9: Entrance to the Cogeneration Plant (Source: consultant) Picture 10: View of the substation of San Carlos Cogeneration Project (Source: consultant) Picture 11: Turbine generator area of the Cogeneration Project (Source: consultant) Picture 12: Rear view of the Cogeneration Project facilities (Source: consultant) Picture 13: View of control room of the Cogeneration Project (Source: consultant) ABBREVIATIONS AND ACRONYMS BCE BOE CENACE ECLAC CONELEC ERGAL INEC LRSE MAE MCPEC MEER MRNR OLADE UNIDO SIEE NIS Ecuadorian Central Bank Barrel of oil equivalent National Center for Energy Control Economic Commission for Latin America and the Caribbean National Electrification Council Renewable Energy for Galapagos Ecuadorian Institute of Statistics and Censuses Electricity Sector Law Regime Ministry of Environment Ministry of Production, Employment and Competitiveness Coordination Ministry of Electricity and Renewable Energy Ministry of Non-Renewable Resources Latin American Energy Organization United Nations Industrial Development Energy Economic Information System National Interconnected System 8

11 2 ENERGY TECHNOLOGIES BASELINE 2.1 INTRODUCTION Ecuadorian economic and social growth, progress and development of industry and technology, and the population lifestyle evolution make it necessary to implement ongoing strategic planning in the energy sector. Hydrocarbons, electricity and renewable energy need to be treated in full under a policy that encourages the efficient use of resources and savings. All aimed to ensuring energy supplies in the short, medium and long term that would meet the demand of present and future generations. The Renewable Energy Observatory is an information system that shows the sector s current status. Renewable energy sources are expected to hold a growing share in meeting future energy demands, thereby substituting non-renewable fossil fuels, some of which are imported. Ecuador is already using certain alternative energy supplies based on renewable resources that partially replace oil & gas products, whose reserve horizon is relatively short on a national plane if no new reserves are confirmed. The Renewable Energy Observatory is an information system that shows the current situation of the energy sector in Ecuador regarding the primary regulations and projects under development that are expected to become a significant source of information for project promoters, developers and investors. 9

12 2.2 METHODOLOGY The information required for the preparation of this report was obtained from various State energy-sector bodies of Ecuador, such as the Ministry of Electricity and Renewable Energy (MEER), the National Electrification Council (CONELEC), the Ministry of Non-renewable resources (MRNR), the Ministry of Environment (MAE), among others. It includes the main components of the regulatory framework for renewable energy, such as: a) the Electricity Sector Law Regime (LRSE); b) the CONELEC Regulation No. 003/011 on Determining the methodology to calculate the term and preferential prices for generation and self-generation projects; and c) Regulation No. CONELEC 004/11 on Dealing with Energy Produced with Non-conventional Renewable Energy Resources. Other sources were the Central Bank of Ecuador (BCE), the Ecuadorian Institute of Statistics and Censuses (INEC), the National Center for Energy Control (CENACE), ERGAL Implementation Unit (Renewable Energy for Galapagos), secondary sources from other bodies such as the Economic Commission for Latin America and the Caribbean (ECLAC), OLADE s Economic Information System (SIEE), etc. 10

13 2.3 GENERAL ECUADORIAN ENERGY INFORMATION Supply The Ecuadorian energy grid is characterized by a predominance of the oil sector (82% in 2009), related to the regional trend of substituting firewood use as an energy source, which in 1970 represented 39% and in 2009 had a 4% share. Moreover, and increase of hydropower in primary energy supply is seen from 1970 (2%) to 2009 (8%) (SIEE- OLADE, 2009). The energy supply mix also reports a 4% share for natural gas, used for generating electricity. From the data provided on Figure 1, we conclude that Ecuador s primary energy resource is fossil fuels: oil and natural gas (86%); and that only 14% comes from renewable energy sources. The subsequent effect is generating more greenhouse gas (GHG) emissions, which justifies this country s policy of diversifying the energy mix by incorporating a greater supply of clean (renewable) energy products. Oferta de Energía Primaria % 4% 2% 4% 82% Petróleo Gas natural Hidroenergía Leña Productos de caña Graph 1: Structure of Primary Energy Supply 2009 (SIEE-OLADE, 2009) Energy sector s demand With regard to the evolution of energy consumption by sector (see Graph 2, SIEE- OLADE, 2009), since 1970 there is rapid growth in the transport sector. It can also be noticed that consumption in the residential sector has remained constant; however this consumption in the last two years ( ) dropped as a consequence 11

14 of implementing the national project for substitution of incandescent lamps to compact fluorescent lamps. In this regard, the Ministry of Electricity and Renewable Energy (MEER) reported that after two years of introducing this measure, generating power during peak hours for lighting was reduced by 232 MW in 2009 (MEER, 2009 a) Evolución del consumo sectorial de energía Ktepp TRANSPORTE INDUSTRIA RESIDENCIAL COMERCIAL,SER,PUB AGRO,PESCA,MINER. CONSTRUCCION,OTR. Total Fuente: SIEE - OLADE Graph 2: Evolution of sector energy consumption (SIEE-OLADE, 2009) In the industrial sector there is a sustained growth of energy consumption since 1970 (297 ktoe) reaching in 2009 values close to 1600 ktoe, which is a reflection of the accelerated industrialization process. The remaining sectors: commercial, agricultural and construction show a moderate growth in the period above reviewed. (SIEE-OLADE, 2009). As a conclusion of the energy-sector demand status, growth is seen in the transportation and manufacturing industries, which is covered through greater use of liquid biofuels, power generation using wind resources, and co-generation using biomass wastes from agro-industrial processes. 12

15 2.3.3 Energy sector s consumption Graph 3 shows the energy consumption by sector in 2009 where the transport sector contributes with 61% of total consumption, followed by the residential sector with 17%, and the industry with 15%. The high percentage of the consumption in the transport sector comes from the growth in the Ecuadorian fleet which coerces on the consumption of oil and diesel. Government policies have identified a huge savings potential during the past three years within the transport and residential sector. In that sense new projects have been introduced (ECOPAIS fuel use: a mixture of 5% ethanol in gasoline extra consumed in the city of Guayaquil, on a pilot project) and new technologies like hybrid cars, efficient public transportation and low consumption light bulb. Consumo sectorial de energía % 1% 3% 17% 15% 61% TRANSPORTE INDUSTRIA RESIDENCIAL COMERCIAL,SER,PUB AGRO,PESCA,MINER. CONSTRUCCION,OTR. Fuente: SIEE - OLADE Graph 3: Sector Energy Consumption by 2009 (SIEE-OLADE 2009) Graph 4 shows the structure of final energy demand per energy. Within the transport sector it was found a prevalence of the use of Diesel Oil & Gas, followed by fuel oil. Within the residential sector we can see a predominant use of LPG, which is used both for cooking and for tap water heating, followed by fuel wood and electricity. Attempts have been made to reduce LPG consumption in Ecuador because it is a subsidized product. The official retail price set by the government is $1.65 per a 15 kilos tank, while the international import price of the product is between $10 and $12 (SIEE- OLADE, 2009). The use of renewable energy through several technologies such as solar panels would help to reduce the consumption in this sector and the introduction of efficient technology such as induction stoves for cookers. The industrial sector has a considerable use of diesel, followed by fuel oil and electricity, reflecting the dependence of this sector on fossil fuels for its production processes. It is clearly seen the need to incorporate clean energy into productive 13

16 processes, which is one of the objectives of the policies established by the Government and are being pursued through initiatives such as " zero fossil fuels on the Galapagos Islands. Demanda final de energía miles de bepbep TRANSPORTE INDUSTRIA RESIDENCIAL COMERCIAL,SER,PUB AGRO,PESCA,MINER. CONSTRUCCION,OTR. Fuel Oil Diesel Oil Kerosene y Turbo Gasolinas/Alcohol Gas Licuado Electricidad Productos de Caña Leña Graph 4: Final Energy Demand by type of energy 2009 (SIEE-OLADE 2009) Electric power grid In 2009, the Ecuadorian electric power grid had a composition with a predominance of hydraulic components (see Graph 5), with about 2032 MW of installed capacity, which represents nearly 40.2% of the country's total capacity (5050 MW, CONELEC, 2009a ); but this figure represents only 8% of existing hydropower potential (OLADE, 2010). Also significant are projects using biomass through co-generation (94.5 MW), which burn bagasse to meet the energy needs of the sugar mill, seeking to produce an energy surplus for sale to the National Interconnected System (SNI). The wind generation component is 2.4 MW, with a project on San Cristobal in the Galapagos Islands (CONELEC, 2009a). As for the rest of the power generation, it should be highlighted the contribution of diesel-based power plants (966 MW) and turbo-gas power plants (875 MW), and the importance of electricity supplied by Colombia (635 MW) in existing electricity interconnection, which enabled to solve drought problems (CONELEC, 2009a). 14

17 Graph 5: Installed capacity, power output 2009, CONELEC, 2009a) CAPACIDAD INSTALADA EN CENTRALES ELÉCTRICAS (MW) Potencia en (MW) Años Hidraúlica Térmica MCI Térmica Turbogas Térmica Turbovapor Eólica Solar Interconexión Total Graph 6: Installed capacity, power output ( , CONELEC, 2009a) During the last decade the hydraulic, thermal turbo-gas and thermal turbo-steam power generation has remained relatively constant. On the other hand, thermal generation (with internal combustion engines located on barges or installations on the continent) has met the country s growing energy demand (see Graph 6). Of note is the amount of energy imports from Colombia and Peru through existing power inter-connection lines, which has avoided the need for heavy rationing and the construction of emergency generation infrastructure (CONELEC, 2009a). 15

18 In 2009, electricity generation with hydropower contributed over 50% of total generation at national level (see Graph 7, CONELEC, 2009a). Although in late 2009, Ecuador suffered one of the harshest droughts in recent decades hydro generation occupied a dominant place. It should be noted that the generation trend of past years was maintained throughout that year (see Graph 8), although it wasn t fully able to cover demand for November and December, time when the country experienced power outages ( CENACE, 2009). Graph 7: Annual Electric Power Supply Nationwide 2009, CONELEC, 2009b) Since 2007, the government of Ecuador has intensified actions to build new hydroelectric plants such as Coca-Codo Sinclair, Toachi Pilaton, Sopladora, Ocaña, etc. (MEER, 2008p). In 2010 it was announced the construction of several power plants, which will be operating sometime in (MEER, 2010w) 16

19 ENERGÍA TOTAL PRODUCIDA E IMPORTADA (GWh) Energía en (GWh) Años Hidráulica MCI Turbogas Turbovapor Eólica Solar Interconexión Total Graph 8: Total Produced and Imported Energy ( ), CONELEC, 2009b) With regard to electricity demand by a consumer group, Graph 9 shows that the residential sector ranks first in intensity of electricity use with 35% of total demand, followed by 30% of the industrial sector, 20 % of the commercial sector, 6% of street lighting, and 9% others (CONELEC, 2009a). Graph 9: Annual demand per consumer group, CONELEC, 2009c) 17

20 The government of Ecuador, aware of this issue, since 2007 implemented a project on energy saving in the residential sector called Dignity rate, which sets consumption limits compensating consumers with a preferential rate. (CENACE, 2009). The effect of this measure can be seen in the slight increase in electricity consumption per capita in the years after the measure (2008 and 2009), reaching 4.5% and 3.7% respectively (See Graph 10). Graph 10: Energy consumption per capita ( , CONELEC, 2009d) As for the price of energy produced from renewable resources, the CONELEC established a preferential price in accordance with Regulation 004/11 (in USD $ cts/kwh), which are detailed in Tables 1 and 2. The conditions to avail from these prices are detailed in the legal framework, which is presented latter. 18

21 Table 1: Preferential Renewable Energy Prices in USD $ cts/kwh POWER PLANTS Continental Territory Galapagos Territory Wind Photovoltaic Biomass and bio-gas < 5 MW Biomass and bio-gas > 5 MW Geothermal Source: CONELEC, April 2011 Table 2: Preferential Prices for Hydroelectric Plants of up to 50 MW in USD $ cts/kwh PLANTS Hydroelectric plants of up to 10 MW Hydroelectric plants greater than 10 MW and up to 30 MW Hydroelectric plants greater than 30 MW and up to 50 MW PRICE Source: CONELEC, April 2011 At residential level there is a national unified electricity rate of 8.6 cents per kilowatt hour, which was set in July 2008 by the Government (CONELEC, 2008). 19

22 In summary, the renewable share in the energy mix of Ecuador focuses on: a) Generation of electricity through the use of natural resources in hydropower, wind, biomass and solar (photovoltaic) projects; b) Fuel gas production (biogas), using organic waste, which are contaminants waste in the food industry and once these are processed contribute to the process; c) Biofuels use for transportation through the partial substitution of gasoline extra with ethanol (5%), in a pilot project in Guayaquil; d) Water heating with solar energy to replace the use of electricity or liquefied petroleum gas with production equipment by the private sector. Ecuador has experience in proper use of technologies related to the implementation of medium, small and micro capacity hydropower plants. The country has plants in various provinces. There are sugarcane bagasse power generating plants, associated with sugar mills for self consumption and sale to the national network. Wind power plants with an operation plant (Galapagos) are being implemented, and there are several yet to be funded (Galapagos, Loja, Imbabura, and Azuay). In regards to solar energy there is a national capacity to manage photovoltaic rural projects, especially in isolated communities in the Amazon region and some in the Galapagos Islands. In spite of important studies carried out in the country aimed to the knowledge and analysis of the potential, there is not yet geothermal generating plants in the most important binational area between Ecuador - Colombia, it is necessary to go to the exploratory wells drilling stage and establishing a pilot plant. 20

23 2.4 LEGAL AND INSTITUTIONAL FRAMEWORK OF RENEWABLE ENERGY IN ECUADOR Legal Framework In order to establish the legal and institutional framework for renewable energies in Ecuador it is important to mention the national policy under which this energy is developed. It is derived from the National Constitution, and among its articles it considers the renewable energy promotion and use as transcribed below: Article 15.- The State shall promote within the public and private sector the use of environmentally clean technologies and low impact clean alternative energy. Energy sovereignty will not be achieved at the expense of food sovereignty, or affect the right to water. Article The State reserves the right to administrate, regulate, control and manage the strategic sectors in accordance with the principles of environmental sustainability, precaution, prevention and efficiency. Article The State shall promote energy efficiency, development and use of environmentally clean and healthy technologies and practices, and diversified, low-impact and non-threatening to food sovereignty, to the ecological balance ecosystems and water rights renewable energy. Article The Central Government and the decentralized autonomous governments will adopt comprehensive and participative urban land use planning policies... The decentralized autonomous governments will develop programs for rational use of water and waste reduction, recycling and proper treatment of solid and liquid wastes. It should also be noted that the Government s National Development Plan entitled: National Well-Living Plan sets some goals and policies on renewable energy development, including: Objective 4: Ensuring the rights of nature and promoting a healthy and sustainable environment. Policy 4.3: Diversifying the national energy mix, promoting efficiency and a greater share of sustainable renewable energy 1. 1 ESPINOZA, Juan L., Energía Renovable en Ecuador: Situación actual y perspectivas, Conference USFQ, Quito, Ecuador, July,

24 Additionally, in 2008 the MEER prepared a document entitled "Energy Policies of Ecuador from 2008 to , highlighting the following state policies for the energy sector s sustainable development related to renewable energy: c) developing a model of environmentally friendly energy technologies. ; d) formulating and carrying out a National Energy Plan, which defines the sector s optimized expansion in the sustainable development context. ; f) promoting the development of sustainable energy resources and fostering projects with renewable generation sources (hydropower, geothermal, solar and wind power), and new efficient electric generation, including nuclear, except generation based on the use of diesel. ; n) reducing fuel consumption for transport substituting it with compressed natural gas - CNG, electricity and the introduction of hybrid technology. Additionally, it details policies for the Development of Biofuels, Biogas, and the promotion and development of geothermal energy. With regard to specific laws in force for the promotion and development of renewable energy in the electricity sector there are the following provisions: Electricity Sector Law Regime (LRSE) R.O.S. 43 from October 10, 1996 Chapter IX, article 63, where the State is committed to promoting the development and use of unconventional energy resources. In Chapter XI, Article 67 of this Law includes tariff advantages and exemptions to income tax to encourage energy production based on renewable energy such as solar, wind, geothermal, biomass, etc Art Waive the payment of fees, additional taxes and other charges affecting the importation of materials and equipment not produced in the country for research, production, manufacture and installation of systems for the use of solar, wind, geothermal, biomass and other prior CONELEC s favorable report. Waive the payment of income tax for five years from the time of its implementation to the companies that with their investment, establish and operate electricity production plants using not conventional energy resources mentioned in the preceding paragraph. 2 Ministry of Electricity and Renewable Energy, Energy Policies of Ecuador ,

25 General Bylaws of the Electricity Sector Law Regime, Art. 53, 77, which establishes inter alia the following: the operation of generation plants using non-conventional sources will be subject to specific CONELEC s regulations and, The State shall promote the use of non conventional renewable energy resources, with priority allocation of funds from the Marginal Rural and Urban Electrification Fund (FERUM). Regulations for FERUM Management, which defines the destination of the funds for new construction, expansion and improvement of distribution systems in rural and marginal urban areas, or for generating systems that use nonconventional renewable energies in rural areas. Regulations of Dispatch and Operation of the National Interconnected System (NIS), which determines that greater generators over 1MW synchronized to the NIS should conduct their transactions in the Wholesale Electricity Market (MEM). This is an obstacle to the mini and micro hydropower plants; it connects to the distribution voltage level. It works in the same way for connected or isolated photovoltaic systems. Regulation is not applicable, as it requires the costly installation of meters. CONELEC Regulation 008/08, lays down the procedures for qualifying FERUM projects. It determines a reserve of 7.5% of the FERUM budget for border provinces, Amazon region and Galapagos. It also states that renewable energy projects may be submitted to the CONELEC by development agencies, provided that the project cannot be handled through networks, or considered by the Electricity Distribution Company in the area, as a nonrenewable energy project. CONELEC 003/11 Regulation, on determining the methodology for calculating the terms and referential prices for generation and self-generation projects developed by private initiatives, including those using renewable energy. o CONELEC decides on the terms to be used in Enabling Instruments for the following cases: a) generation projects that are delegated to private initiatives; b) generation projects that use renewable energy and abide by the regulations for the incentives provided for this type of project; and c) self-generation projects that are developed by private initiatives. o CONELEC will determine the prices in the following cases: a) for each public selection process for generation projects that are delegated to private initiatives and contained in the Electrification Master Plan (EMP); b) for each negotiation process for generation projects that are proposed by and delegated to private initiatives; c) for generation projects using renewable energy and abiding by the regulations for the incentives provided to this type of projects; and, d) for marketing energy surplus from self-generation projects. 23

26 CONELEC Regulation 004/11, on dealing with energy produced with Renewable, Non-Conventional Energy Resources: wind, biomass, bio-gas, photovoltaic, geo-thermal, and hydroelectric plants of up to 50 MW of installed capacity. Those interested in carrying out a project using renewable sources may request preferential treatment as a non-conventional generator, and will have to submit the appropriate requirements to CONELEC. The preferential prices to be paid for energy that is measured at the point of delivery are those indicated in Tables 1 and 2. The prices established in these regulations will be guaranteed and will be in effect for 15 years as of the signing date of the Enabling Instrument for all companies that sign said contract until December 31, CENACE is obliged to dispatch preferentially all electric energy that plants using non-conventional renewable resources deliver to the system, up to a ceiling of 6% of the installed and operational capacity of the NIS. The biofuel legal framework is given by several Executive Orders: No (07/10/2009), No (12 / 19 / 2008) and, No (05/08/2009), which provide the prices of anhydrous ethanol, biodiesel and vegetable oil; such orders also fix the price of anhydrous ethanol at $ 0.76 / l excluding VAT, and it transfers all the powers of the biofuels issue to the (MCPEC) Institutional Framework In 2007, the Government created the Ministry of Electricity and Renewable Energy (MEER) specialized in the sector and responsible for designing and implementing policies and programs regarding renewable energy development in the country through the Under secretariat of Energy Efficiency and Renewable Energy. Additionally, the National Electricity Council (CONELEC) is responsible for the electricity sector s regulation (including renewable energy) and approves the concessions for the exploitation of renewable energy resources and also setting these energies prices. Regarding biofuels the governing body on this issue is Ministry of Production, Employment and Competitiveness Coordination (MCPEC), chaired by the National Biofuels Board, a multisectoral body composed of various biofuels related Ministries, state companies and private sector representatives. 24

27 2.5 INFORMATION ABOUT THE MOST RELEVANT RENEWABLE ENERGY FACILITIES Introduction As stated in the above chapters, Ecuador has several projects that use renewable energy for electricity generation and also for the capture of greenhouse gases. Among the most significant projects, a few initiatives were selected by technology type. In regards to biomass, there are 3 relevant projects under the co-generation type using bagasse in the sugar industry. The contribution of these projects to national generation is important (see Graph 7). On the other hand, the first wind farm in Ecuador in operation is located in Galapagos on the San Cristobal Island, which is a significant environmental and energy contribution to the island s ecosystem. There are two types of facilities in regards to biogas: a) Biogas production for energy use (reduced consumption of fossil fuels in the boilers); b) Capture of biogas for greenhouse gases reduction, without being used for energy (due to the lack of quantification of the captured biogas). An example of capturing such gases may be pig farms, where there is a significant production of methane gas, which still has no quantifiable energy use. Ecuador has experience managing hydroelectric plants (especially small ones) that are primarily focused on using hydro potential for electricity generation. Finally, there are several rural electrification projects on photovoltaic systems in isolated communities, which due to their size do not really impacting the global energy mix but are very important for the target population, since they allow access to modern energy sources. 25

28 Although within the national regulatory framework (Regulation CONELEC ) preferential prices for renewable energy projects have still not been made massified, considering the great potential existing in this country. Detailed below are a number projects that use renewable energy that currently exists in the country Eco electric Valdez, Bagasse Cogeneration Plant Parameter Units Information Country Facility s name Location (Town / Province) Technology type Ecuador Eco electric Valdez,Bagasse Cogeneration Plant Guayas Province Biomass Operation date 2008 Type of service (public / private) Legal Status (Ltd/Business Corporation Public Company) Contact Person Private Business Corporation Mr. Ralf Schneidewind rschneidewing@valdez.com.ec Year of reference Rated power Power output Generated power % of energy sold / delivered to the public service MW MW GWh % ,50 35,20 76,64 52,4 26

29 Plant Factor Efficiency % (MWh/TEP) Used energy source Biomass Source name Consumption source in year of reference Investment ton/day US$ Bagasse Price of sold energy US$/MWh 97,2 Ceased CO2 emissions tco 2 /year Short description This is a Biomass Cogeneration plant implemented in Compañía Azucarera Valdez S.A.. The Project increases current plant capacity by 27.5 MW and sells excess power to the National Interconnected System of Ecuador. Project s relevant aspects High socio economical impact in a deprived area in the Country. High component of cleaner production (use of sugar cane residues for power generation). Information sources Mr. Ralf Schneidewind 27

30 2.5.3 San Carlos Cogeneration Parameter Units Information Country Facility s name Location (Town / Province) Ecuador Bagasse Cogeneration Project Marcelino Maridueña Technology type Power electricity cogeneration from bagasse Operation date 2005 Type of service (public / private) Legal Status (Ltd/Business Corporation Public Company) Contact Person Private S.A. Mr. Amalio Puga/ apuga@isc.com.ec Mr. Roberto Rodriguez Year of reference Rated power Power output Generated power % of energy sold / delivered to the public service Plant factor Efficiency MW MW GWh % % Used energy source Source name Biomass 28

31 Consumption source in year of reference Bagasse Ton/day Investment US$ Price of sold energy US$/MWh Ceased CO2 emissions tco 2 /year Short description The Project is located in the sugar mill and is aimed to increase the installed cogeneration capacity and the efficiency of the boilers and the use of bagasse in steam production. Project s relevant aspects High socio economical impact in a deprived area in the Country. High component of cleaner production (use of sugar cane residues for power generation. Information sources Mr. Amalio Puga IANCEM Cogeneration Parameter Units Information Country Facility s name Location (Town / Province) Technology type Ecuador Northen Sugar mil Gridta - IANCEM Ibarra Power electricity cogeneration from bagasse Operation date

32 Type of service (public / private) Public /Private Legal (Ltd/Business Corporation Company) Contact Person Status Public Gridta Mr. Fausto Rivera Gerencia@tababuela.com/frivera@tababuela.com Year reference of 2009 Rated power Power output Generated power % of energy sold / delivered to the public service Plant factor Efficiency MW MW GWh % % 3 Used source energy Biomass Source name Consumption source in year of reference Bagasse ton/day Investment US$ 30

33 Price of sold energy Ceased CO2 emissions US$/MWh tco 2 /year Short description Project s aspects relevant Information sources San Cristobal Wind power project Parameter Units Information Country Facility s name Location (Town / Province) Technology type Ecuador San Cristobal wind power project Galapagos, San Cristobal Island Wind Turbine-Engines Operation date October 2007 Type of service (public / private) Legal Status (Ltd/Business Corporation Public Company) Contact Person Public-Private Eolicsa S.A. Mr. Luis Vintimilla Year of reference 2009 lvintimi@pi.pro.ec 31

34 Rated power Power output Generated power % of energy sold / delivered to the public service Plant factor Efficiency Used energy source Source name Consumption source in year of reference MW MW GWh % % Wind power Wind turbine ton/day Investment US$ Price of sold energy US$/MWh Ceased CO2 emissions tco 2 /year Short description Project s relevant aspects First large-scale renewable energy project in a very environmentally susceptible protected area Information sources Electricity Ministry, Conelec Cenace, Elecgalapagos, EOLICSA, etc. 32

35 2.5.6 Biogas Codana Project Parameter Units Information Country Facility s name Location (Town / Province) Technology type Ecuador Codana Biogas project Milagro/Guayas Biomass Operation date October de 2008 Type of service (public / private) Legal Status (Ltd/Business Corporation Public Company) Contact Person Private Business Corporation Bolivar Malta bmalta@codana.com Year of reference 2008 Rated power Power output Generated power % of energy sold / delivered to the public service Plant factor Efficiency MW MW GWh % % Used energy source Biomass Source name Consumption source in year of reference Anaerobic reactor for biogas production 33

36 ton/day Investment US$ Price of sold energy US$/MWh Self production Ceased CO2 emissions tco 2 /year Short description The objective of this project is to replace the open anaerobic ponds used to process vinasse produced by an anaerobic reactor in the distillation process and thus to reduced fuel consumption in boilers Project s relevant aspects Capture of methane produced by vinasse anaerobic production in the ponds. Driving this methane to the plant boilers to get a substantial reduction in fuel used Reducing the possibility of an explosion at the plant due to the produced biogas. Reducing the stench caused by methane in the ponds and improving environmental quality in the area. Information sources Mr. Bolivar Malta, bmalta@codana.com Perlabí Hydropower Project Parameter Units Information Country Facility s name Location (Town / Province) Technology type Ecuador Perlabí Hydropower Project San José de Minas / Pichincha Small hydropower plant 34

37 Operation date 2004 Type of service (public / private) Legal Status (Ltd/Business Corporation Public Company) Public/Private Business Corporation Contact Person Mr. Fernando Velastegui/ fvelastegui@cameriecuador.com Year of reference Rated power Power output Generated power % of energy sold / delivered to the public service Plant factor Efficiency Used energy source Source name Consumption source in year of reference MW MW GWh % % Hydraulic Hydraulic Investment ton/day US$ Price of sold energy US$/MWh 24 Ceased CO2 emissions tco 2 /year 7424 Short description This is a small hydropower plant located on the Chirizaca river, which does not affect in any way the river bed. 35

38 Project s relevant aspects In addition to contributing to the reduction of thermal generation in the Country, it helps regulating the distribution network voltage of Quito`s power utility company Information sources Mr. Fernando Velastegui/ fvelastegui@cameriecuador.com Toachi Pilaton Hydropower Project Parameter Units Information Country Facility s name Location (Town / Province) Technology type Operation date Type of service (public / private) Ecuador Toachi Pilaton Hydropower Project 80 km south west of Quito, between the provinces of Pichincha and Cotopaxi Hydropower plant In December 2007 the construction began, which was expected to be completed in December 2011, but there were setbacks with the construction company. Public/Private Legal (Ltd/Business Corporation Company) Status Public Contact Person Mr. Byron Granda bgranda@hidrotoapi.com.ec Year of reference Rated power MW

39 Power output Generated power % of energy sold / delivered to the public service MW GWh % Plant factor Efficiency % Used source energy Hydraulics Source name Consumption source in year of reference ton/day Hydraulics Investment US$ 470,600,000, from the Ecuadorian Investment Fund in the energy and hydrocarbon sector (FEISEH). Price of sold energy US$/MWh Ceased CO2 emissions tco 2 /year Approximately 1 million tones of CO2 per year, when the project is operational. Short description Project s aspects relevant The Project`s goal is to transfer the Toachi river flow through a tunnel, achieving a total installed capacity of 228 MW at two plants: the Sarapullo Plant that collects the Pilaton river waters to generate 50MW, and Alluriquin with an installed capacity of 178 MW which collects Toachi and Pilatón river flow. Construction of two hydropower plants; environmental management and sustainable development plan; reduction of environmental pollution, avoiding the burning of fossil fuels. Information sources Web Portal of the Ministry of Electricity and Renewable Energy (MEER): 37

40 < internaview.htm?code=602&template=meer.internas3> Coca Codo Sinclair Hydropower Project Parameter Units Information Country Facility s name Location (Town / Province) Technology type Operation date Type of service (public / private) Ecuador Coca Codo Sinclair Hydropower Project It is in the sub basin of the Coca river at the Sucumbíos province. Hydropower plant April 2008 was set as the date to begin the construction with 60 months duration. Public/Private Legal Status (Ltd/Business Corporation Public Company) Contact Person Ministry of Electricity and Renewable Energy (MEER) Year of reference Rated power Power output Generated power % of energy sold / delivered to the public service Plant factor Efficiency MW MW GWh % %

41 Used source energy Hydraulics Source name Consumption source in year of reference ton/day Hydraulics Investment US$ 1,590,000,000 from the Ecuadorian Investment Fund in the energy and hydrocarbon sector (FEISEH). Trust with the National Finance Corporation Price of sold energy Ceased CO2 emissions US$/MWh tco 2 /year Short description Project s relevant aspects Information sources The Project consists of run of the Coca river exploitation capturing the Salt River and restitution in Codo Sinclair. It has a side inlet, two grit chambers, two adduction tunnels that goes to a compensating reservoir that serves as a surge tank, penstock and turbine building. With the Project is expected to: address the existing energy demand in the Country, to reduce electricity imports from Country neighbors, to reduce dependence on thermal generation plants. Web Portal of the Ministry of Electricity and Renewable Energy (MEER): < internaview.htm?code=602&template=meer.internas3> 39

42 Mazar Hydropower Project Parameter Units Information Country Facility s name Location (Town / Province) Technology type Operation date Type of service (public / private) Ecuador Mazar Hydropower Project Cola de San Pablo sector, Paute river, Azuay province Hydropower plants Construction began in March By mid-2010 the first turbine came into operation. Public/Private Legal Status (Ltd/Business Corporation Public Company) Contact Person Ministry of Electricity and Renewable Energy (MEER) Year reference of Rated power Power output Generated power % of energy sold / delivered to the public service Plant factor Efficiency MW MW GWh % GWh are expected 40

43 % Used energy source Hydraulics Source name Consumption source in year of reference ton/day Hydraulics Investment US$ 461 million, with funds from the Ecuadorian Investment Fund in the energy and hydrocarbon sector (FEISEH). A trust was established with the National Finance Corporation. Price of sold energy US$/MWh Ceased emissions CO2 tco 2 /year It is expected to cease 1 million tones of CO2 per year Short description This is the second development stage of Paute River hydropower potential in the Cola of San Pablo area. This will increase the lifespan of the Paute Molino Project, because of the retention of sediments through the Mazar reservoir. It constitutes a use of upstream Central Mill Paute river flow, near the mouth of the Mazarriver. Project s aspects relevant It consists of rock fill dam forming a reservoir of 410 Hm3 of total volume. The normal maximum level of the reservoir is at 2153 m above sea level. Central Mill and Blower plant average power energy is expected to be increased by over 12%. Information sources Web Portal of the Ministry of Electricity and Renewable Energy (MEER): < internaview.htm?code=602&template=meer.internas3> 41