The energy crisis in Ecuador: Macroeconomic impact of unaccounted technical variables

Abstract

In light of the recent blackouts in Ecuador, a debate has arisen over the problems of hydroelectric generation, focusing in the media on the lack of rainfall and certain maintenance issues at the 14 built dams. This article provides information on an underlying hypothesis: explaining the generation problems based on significant technical failures in the hydroelectric system. This hypothesis is supported by comparing the estimated capacity and production, as well as the overrated estimate of future demand in the original energy matrix change report, with current data indicating much lower capacity and production, as well as even lower demand than forecast. It is proposed that a) the lack of correspondence between the two data, b) the absence of a report in the public domain, commissioned to a German external consulting firm about the situation of the main hydroelectric plants, and c) the inclusion of six new small dams in the generative accounting, suggests that administrative opacity overrides the issue of generative capacity, a fundamental aspect of the country's macroeconomy. Such opacity could obscure an explanation for the energy crisis and foreign debt other than that currently offered by public statistics.