On October 26, 2021, the President of Ecuador issued the Executive Decree 238 (hereafter the “Executive Decree”), by which the Energy Sector Policies were established (hereafter the “Policies”).
The main objective of these Policies is to articulate an efficient, competitive, sustainable, environmentally responsible energy sector to guarantee legal certainty and promote private investment.
Through these Policies, Ecuador also seeks to promote the institutional and regulatory framework necessary to guarantee a sustained increase in installed electricity generation capacity to meet the demand of the Electricity Master Plan for the next 10 years.
Considering the above, the main guidelines of the Policies are highlighted below, which must be executed by the Ministry of Energy and Natural Resources until January 26, 2022:
1. Propose public and institutional policies and reform the legal framework to encourage private investment in the different areas of the electric power public service, public lighting service, electric vehicle charging service, and energy storage.
2. Promote efficient and competitive schemes for the participation of the private sector in the stages of generation, transmission, distribution, commercialization, and storage of energy, public lighting service, and electric vehicle charging service. These schemes must adopt globally successful practices and standards.
3. Regulate the incentives and preferential conditions to promote non-conventional renewable energy generation and self-generation projects.
4. Identify projects to delegate to private investment.
5. Propose a plan with pricing schemes and preferential conditions for the private sector to increase the participation of self-generators in the Ecuadorian energy market by at least 250 MW until 2025 using renewable energy sources.
6. Cooperate with the Ministry of the Environment to avoid duplication of procedures in environmental licensing processes and authorizations for the use and exploitation of water.
7. Convene public selection processes for the concession of the 500 MW Block of renewable energy, Termo Gas Machala Combined Cycle, Northeastern Transmission System, 400 MW Natural Gas Combined Cycle Block, and delegated management of the Blower Power Plant.
8. Prepare a report with the photovoltaic capacity installed in Ecuador to establish policies and structure the regulatory and institutional framework necessary to encourage the adoption of renewable sources of energy provision at a residential, industrial, and commercial level.
Additionally, through the Executive Decree, it is provided that:
a. Until November 26, 2021, the Ministries of Economy and Finance and Energy and Natural Resources must present a proposal to adopt the Regulation for Public-Private Associations to the particularities of the energy sector.
b. Until December 26, 2021, the Ministry of the Environment must review the pending processes of the energy sector (public and private) and establish an immediate action plan to dispatch them within no more than 3 months.
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