{"id":36464,"date":"2019-08-21T14:38:00","date_gmt":"2019-08-21T14:38:00","guid":{"rendered":""},"modified":"2020-06-22T17:19:46","modified_gmt":"2020-06-22T17:19:46","slug":"11464-ecuador-s-china-backed-hydropower-revolution-2","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/energy\/11464-ecuador-s-china-backed-hydropower-revolution-2\/","title":{"rendered":"Ecuador\u2019s China-backed hydropower revolution"},"content":{"rendered":"

Ecuador\u2019s construction of large Chinese-financed hydropower plants over the past decade was expected to rid the country of power shortages and provide surplus power for export to neighbouring countries. But delays, accidents and high costs have left Ecuador struggling to repay its Chinese creditors.<\/p>\n

Former president Rafael Correa announced that Ecuador would build eight new hydro plants by 2016 at a total cost of some US$6 billion. Jorge Glas, then minister of strategic sectors, was responsible for the master plan. He was\u00a0later jailed<\/a>\u00a0in 2017 as part of the continent-wide corruption scandal involving Brazilian construction giant Odebrecht.<\/p>\n

Only the Odebrecht-built Manduriacu plant was inaugurated on schedule, in 2015. The other seven projects due in 2016\u00a0missed deadlines due to engineering and environmental problems. The projects are either partially or wholly owned by Chinese contractors. They\u2019ve been beset with accidents, resulting in the deaths of 26 Ecuadorean and Chinese workers.<\/p>\n

Today, only four of those seven projects are operational, providing about 2.5 gigawatts of capacity.<\/p>\n

Dams at work<\/h2>\n

Ecuador depends mostly on coal-fired power but its commitment to increase the share of hydropower, up 35% with the new hydro projects, will allow the country to significantly reduce its carbon emissions.<\/p>\n

\"Coca<\/a>Coca Codo Sinclair, Ecuador\u2019s largest hydroelectric plant, which was due to begin operations in 2012, has experienced financing problems, strikes by workers demanding better conditions from contractor Sinohydro, and accidents such as the December 2014\u00a0collapse<\/a>\u00a0of a pressure well that claimed 14 lives. The plant, eventually inaugurated at the beginning of 2016, has visible fissures in its water distributors, owing to the use of unsuitable materials, according to a report by the Comptroller\u2019s Office.<\/p>\n

According to the Electric Corporation of Ecuador\u00a0(Celec), which will operate the plant, repair work will last approximately one year and the costs will be borne by the contractor. \u201cEcuador will definitively not take over the plant until all the works permitting Coca Codo Sinclair to operate normally have been carried out,\u201d Celec wrote in an email to\u00a0Di\u00e1logo Chino<\/em>.<\/p>\n

In the case of the three plants that comprise the Mazar Dudas complex, only Alaz\u00e1n is operating. In 2015, Celec unilaterally terminated the construction contract with China National Electric Engineering Company (CNEEC) for non-compliance.<\/p>\n

\"Mazar<\/a>According to the most recent data on Celec\u2019s website, construction of the engine room and the electromechanical assembly of the second San Antonio power plant were planned for 2018. Re-engineering studies for the third Dudas power plant were also scheduled for 2018.<\/p>\n

The Quijos project also experienced problems due to CNEEC\u2019s non-compliance with technical standards, according to Celec documents. This led Celec to terminate the contract in December 2015. A\u00a0mediation process is currently underway between the state attorney\u2019s office and the Chinese firm. In an emergency declaration, Celec ended up awarding the assigning works to local company Proyaben S.A. in 2016 and 2017.<\/p>\n

\"Quijos\"<\/a><\/p>\n

\u201cThey couldn\u2019t make any progress as there were geological problems. No matter how many studies you do, the studies are merely superficial,\u201d said Marco Valencia, undersecretary for Electricity Generation and Transmission at Ecuador\u2019s energy ministry.<\/p>\n

\u201cGeophysical and geological analyses may be carried out, but the moment you enter with the drilling machinery in hand, you are hit with the reality of the rock itself. In those two projects [Mazar Dudas and Quijos], we encountered geological problems like these, and the contractor could not fulfil their obligations.\u201d<\/p>\n

The Toachi Pilat\u00f3n project is also in a state of paralysis. Construction was ahead of schedule, according to Celec\u2019s 2018 stocktake. In this phase, several foreign companies were involved, including Odebrecht, which was later expelled from the country by the government.<\/p>\n

\"Toachi<\/a>In 2010, Celec hired China International Water & Electric Corporation (CWEC) for the civil construction and the Russian company Inter RAO UES to supply electromechanical equipment.<\/p>\n

Faced with constant delays, Correa ordered the termination of the builders\u2019 contract in December 2016. After one-and-a-half years with no progress, on 22 May 2018 Russian contractor Tyazhmash S.A. was awarded the contract to complete works.<\/p>\n

Ecuador\u2019s energy challenges<\/h2>\n

In 2018, Ecuador produced approximately 23,000 gigawatt hours, most of which powered the country\u2019s homes, industries and public buildings. Hydropower generated 85% of that energy, according to Valencia.<\/p>\n

\"Sopladora\"<\/a><\/p>\n

With the new hydroelectric plants in operation, Len\u00edn Moreno\u2019s government has provided assurances that greenhouse gas emissions will be reduced, due to the decrease in the consumption of fossil fuels in thermoelectric plants.<\/p>\n

\u201cSince they began operating, each year we have seen a reduction of three million tonnes of carbon dioxide,\u201d Valencia said. According to the undersecretary, in 2014 and 2015 \u2013 the years with the highest thermoelectric production \u2013 Ecuador emitted an estimated six million tonnes of CO2. In 2016, this fell to five million. This has since dropped to between 1.5 and 2 million tonnes.<\/p>\n

However, the overall balance may not be so positive since the construction of hydropower plants has considerable environmental impacts, which, as figures for many of the projects show, also have big economic costs. They have also led to\u00a0energy overproduction<\/a>, which is difficult to correct, according to Paulina Garz\u00f3n of the China-Latin America Sustainable Investment Initiative.<\/p>\n

\u201cIt\u2019s politically and economically non-viable for any Ecuadorean government to undertake genuinely clean energy projects such as wind or solar when it already has excess energy production and an onerous debt to repay,\u201d said Garz\u00f3n, who authored a\u00a0book chapter<\/a>\u00a0on the projects and the loans that made them possible. \u201cThe construction of Coca Codo Sinclair is an immense obstacle to achieving a truly clean energy matrix in Ecuador,\u201d she added.<\/p>\n

\"Minas<\/a>Following its loan default in 2008, Ecuador has been locked out of international capital markets, leading Correa\u2019s government to agree loan packages with China that are repaid with oil sales. As global crude prices slumped, Ecuador had to pump more oil to meet its repayments, calling into question both the economic and environmental sustainability of the model.<\/p>\n

For Arturo Villavicencio, professor of ecological economics and energy at the Andean University, hydropower development was the best way to shift Ecuador\u2019s energy mix, but the scale of development was too great.<\/p>\n

\u201cThe reasonable thing would have been to select smaller projects, where the national contribution could have been greater,\u201d said Villavicencio, who was also a\u00a0former member of the UN Intergovernmental Panel on Climate Change.<\/p>\n

\"Delsitanisagua\"<\/a>\u201cA great opportunity for national technological development was wasted and we would not have had the Chinese making all projects turnkey,\u201d added Villavicencio, in reference to\u00a0contracts that give\u00a0decision-making power\u00a0to the financier.<\/p>\n

Part of the problem, Villavicencio said, is that many companies were not prepared to sort out the technical problems they found and that the Ecuadorean government has been unable to monitor their work. Furthermore, although there are several construction problems in need of monitoring in the remaining dams, Villavicencio warned that Ecuador will fail to reap the benefits of hydropower if the country does not improve supervision of rivers that feed into the system.<\/p>\n

This article is republished from <\/em>Di\u00e1logo Chino<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A big gamble on multiple Chinese-financed dams has landed Ecuador with a debt problem<\/p>\n","protected":false},"author":3465,"featured_media":60535,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[758,757],"tags":[529,544,554],"hashtags":[],"country":[],"class_list":["post-36464","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-energy","tag-debt","tag-finance","tag-hydropower"],"acf":[],"yoast_head":"\nEcuador\u2019s China-backed hydropower revolution | Dialogue Earth<\/title>\n<meta name=\"description\" content=\"A big gamble on multiple Chinese-financed dams has landed Ecuador with a debt problem\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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