Government in talks with Spanish firm for 600 megawatts of solar; long-delayed projects, payment disputes remain obstacles.

Ecuador is taking new steps to confront its persistent energy crisis by ramping up investment in solar power, a sector that until now has played only a marginal role in the national electricity grid. The government confirmed that it has opened negotiations with a Spanish business consortium to install 600 megawatts of photovoltaic generation capacity—a move that could significantly diversify the country’s energy portfolio, which remains overwhelmingly dependent on hydroelectricity.

Energy Minister Inés Manzano announced the initiative on May 23, 2025, marking what the government hopes will be a turning point in its struggle to resolve ongoing electricity shortages exacerbated by recurring droughts. While the minister did not disclose the identity of the Spanish firm or the exact site for the new installation, she stressed the urgency of moving toward cleaner and more stable alternatives.

“This is a strategic investment,” Manzano stated. “We need to reduce our reliance on hydroelectric generation, which has proven increasingly vulnerable to climate variability.”

Hydroelectric Dominance Exposes Risks

Ecuador’s energy mix remains heavily tilted toward hydroelectric power, which supplied 81% of domestic electricity needs during the first half of 2025. But that number can plummet during dry seasons—as it did in 2023 and 2024—when drought conditions left reservoirs at critical levels and forced the government to impose rolling blackouts. In some months during those years, hydroelectric generation fell to below 40% of national output.

Despite the scale of the crisis, Ecuador has been slow to adopt renewable alternatives like solar. According to 2024 data from the national grid operator Cenace, solar power accounted for only 1% of total electricity generation. The entire country had just 29 megawatts of installed solar capacity in 2023—equivalent to a mere 0.3% of Ecuador’s total generation capacity of nearly 8,900 megawatts.

Though there are currently 24 solar generation facilities in operation, they are all small in scale, and their combined output does little to ease strain on the system. Government officials acknowledge that much more ambitious efforts are needed to shift this balance.

The Mazar Flotante and Other Solar Ambitions

Among the key projects the government is now advancing is the Mazar Flotante initiative, which involves the installation of floating solar panels on the Mazar reservoir in south-central Ecuador. President Daniel Noboa recently spoke about the project’s potential, estimating it could generate 100 megawatts. Importantly, a portion of that energy could be used to power pumps that would return water to the reservoir, ensuring the continued operation of the critical Paute Hydroelectric Complex.

“This project not only helps us generate more energy, but also makes our hydroelectric plants more resilient,” said Noboa, who added that the Mazar Flotante project is in the final stages of its feasibility studies and has attracted private sector interest.

Still, Ecuador has struggled in recent years to get large-scale solar projects off the ground. The 200-megawatt El Aromo project—awarded to the Spanish company Solarpack in 2020—has yet to begin construction. Initially budgeted at $145 million, the plant was to be built on the site of the former El Pacífico refinery in Manabí.

Another delayed project, the 14.8-megawatt Conolophus installation in the Galapagos Islands, was awarded in 2021 to the Gran Solar Total Eren consortium. It too remains stalled despite a planned investment of $63 million.

Payment Disputes and Bureaucratic Gridlock

The delays in both the El Aromo and Conolophus projects are rooted in longstanding disputes over payment mechanisms. Specifically, the government has been unable to implement a reliable model to ensure that private generators are compensated on time. Unions representing workers at state-owned electricity distribution companies have strongly opposed the use of trust funds to prioritize payments to private investors.

In late 2024, the government announced that it had secured a payment guarantee from the Inter-American Development Bank (IDB), intended to reduce investment risk and jumpstart construction. However, this guarantee has not yet led to tangible progress, and investor confidence remains shaky.

Industry experts argue that without a clear and enforceable payment system, Ecuador will struggle to attract the kind of large-scale renewable investments it urgently needs.

Mapping the Nation’s Solar Potential

Despite the challenges, government officials remain optimistic about solar’s long-term promise. In January 2024, with support from the French Development Agency (AFD), the national electricity holding company CELEC published a detailed solar potential map for Ecuador.

That analysis identified a total capacity of up to 1,580 megawatts across seven potential projects. Proposed sites are located in provinces such as Imbabura, Pichincha, Cotopaxi, and Chimborazo—regions that benefit from high levels of solar irradiance.

However, CELEC cautioned that solar projects cannot be relied upon for their full rated capacity. Instead, their actual output is determined by what is known as the plant factor, which reflects the number of hours per day that a facility can operate at peak efficiency. For a 100-megawatt solar plant, a typical plant factor might be 25%, meaning it would produce the equivalent of 25 megawatts continuously over a 24-hour period.

That variability complicates efforts to plan national energy supply, especially in a country where power outages have become a regular feature of daily life.

Cost Remains a Barrier

Another major obstacle to rapid solar development is cost. According to CELEC’s 2024 report, the cost of photovoltaic electricity in Ecuador is around 40 cents per kilowatt-hour—roughly four times the national average electricity tariff, which ranges between 9 and 10 cents per kilowatt-hour.

Nevertheless, officials argue that the long-term benefits of solar outweigh the costs, particularly because solar generation reaches its peak during the dry season, when hydroelectric output declines.

“From an energy resilience perspective, solar is not just a complement—it’s a necessity,” CELEC stated in its report.

A Race Against Time

For Ecuador, the stakes are high. With its economy already under pressure from inflation, budget deficits, and rising oil prices, further disruptions to the power grid could carry significant social and economic costs.

The government’s pivot to solar is part of a broader strategy to stabilize the country’s energy supply while reducing its vulnerability to climate shocks. But whether that vision can overcome entrenched bureaucratic and political hurdles remains to be seen.

The proposed 600-megawatt deal with the unnamed Spanish firm is being framed as a symbol of a new direction—one in which private capital and renewable innovation play a larger role in Ecuador’s energy future. But given the country’s track record with such projects, skepticism remains.

For now, Ecuador is betting that with the right combination of incentives, transparency, and international support, solar energy might finally rise to its potential.