Ecuador abandons its contentious disagreement concerning hydroelectric power generation with China

The Coca Codo Sinclair hydroelectric plant, located in a high seismic activity and regression erosion zone, has been a source of both hope and frustration for Ecuador. Designed to provide over 8,700 gigawatt-hours of energy per year, accounting for a third of the national demand, the plant was expected to transform the country's energy matrix and put an end to blackouts.

However, the plant, constructed over 19 years and costing over 3.2 billion dollars, remains unfinished and does not reach its full potential of 1,500 megawatts. The Chinese company Sinohydro, backed by a 1.7 billion dollar loan from the China Export-Import (Exim) Bank, was in charge of the mega-project. However, the project ended up costing more than double, a fact that has led to international arbitration by the Ecuadorian government to claim $580 million in damages due to structural defects.

The regressive erosion of the Coca River has been a significant challenge for the plant. The erosion has destroyed nearby infrastructure and is approaching the hydroelectric plant's water intake. From 2020 to the present, Celec, the Ecuadorian electricity company, has allocated over 150 million dollars in studies, design, consultancies, and engineering works related to the erosion of the Coca River.

Last winter's conditions in the Amazon increased the Coca River's flow, destroyed containment works, and deepened the riverbed, worsening the risk to infrastructure. As a result, the plant operates intermittently due to its condition as a river plant and its dependence on the Coca River's flow. Despite these challenges, the plant has been in operation since 2016, and during the 2024 drought, it provided almost a third of Ecuador's electricity, despite operating at only a third of its capacity.

In a bid to address these issues, the Ecuadorian government has reached an agreement with PowerChina, the parent company of Sinohydro, for it to assume operation of the plant. Upon his return, Foreign Minister Gabriela Sommerfeld announced this decision. As part of the agreement, PowerChina will disburse $400 million in compensation to the Ecuadorian government.

Inty Grønneberg, an Ecuadorian mechanical engineer and scientist who has studied the evolution of Coca Codo Sinclair over the past two decades, believes that having PowerChina in charge of the hydroelectric plant is the best possible solution. However, the decision to hand over the operation of the plant to PowerChina, the same company responsible for its construction, has been criticized by political figures outside the government.

The exact date for the handover of operation and maintenance of the Coca Codo Sinclair hydroelectric plant has not been publicly specified. Nevertheless, the future of the plant remains uncertain, with a severe drought expected in 2025, and power cuts once again anticipated. Despite the challenges, the Coca Codo Sinclair hydroelectric plant continues to hold the promise of a stable energy supply for Ecuador, a promise yet to be fully realised.

Ecuador abandons its contentious disagreement concerning hydroelectric power generation with China