Narayan AmmachchiEcuador is reeling from an energy crisis so severe that power blackouts sometimes last up to 14 hours a day. For businesses, it’s a battle for survival.
Over 3,500 jobs were wiped out in the month of September alone, with small and medium-sized enterprises bearing the brunt of the disaster, according to a recent statement from the Labor Ministry.
Industry groups warn that the crisis may drain at least $2 billion from the economy this year.
Many businesses have turned to diesel generators to keep the lights on. “We’re surviving by buying generators, but they pollute the air and have pushed up our costs,” says Nathan Keffer, owner of Bandido Brewing, a brewery in Quito.
“Sometimes we have to change production schedules, starting work at midnight just to match blackout times,” Keffer added.
Some businesses, he says, have even moved production to other sites or outsourced to companies with larger generators.
Ecuador has already seen four energy ministers in a year, each promising change. But analysts say there is no ‘quick fix’. They sum up saying Ecuador’s heavy reliance on hydroelectric power has backfired. Hydroelectric power is the backbone of Ecuador’s energy supply, contributing over 80%.
But a severe drought quickly emptied reservoirs, leaving the country face a crippling shortfall of 1,000 megawatts.
“This isn’t just about low water levels. Poor construction by Chinese companies is also to blame,” says Nathan Keffer, pointing to the Coca Codo Sinclair dam. The massive hydroelectric project, built by China, has become a symbol of wasted potential.
Between 2007 and 2017, under Rafael Correa’s presidency, Ecuador built 14 hydroelectric projects. Yet, due to funding shortfalls, only two became operational. A staggering $2.2 billion was poured into the Coca Codo Sinclair dam alone.
At its 2016 inauguration, Correa hailed the dam as a game-changer, promising it would supply 30% of Ecuador’s electricity. But today, the facility is plagued by construction defects, river erosion, and sediment build-up
Rolling Blackouts
The power crisis began with sporadic outages in December 2023. By September this year, blackouts had become a daily reality.
President Daniel Noboa has pledged to end the disruptions by year’s end, but the National Electricity Operator (Cenace) has a more sobering timeline: the outages might persist until March 2025, when the rainy season kicks in.
Recently, hopes flickered as officials discussed cutting blackout times to three hours daily. A drizzle of rain in Colombia, Ecuador’s primary electricity supplier, brought temporary respite.
“The $400 million spent importing electricity from Colombia is not sustainable,” says Rinaldo Brutoco, President of the World Business Academy. He insists Ecuador should pivot to renewable energy.
“The hydroelectric plants are in the coastal Andes and Amazon provinces. Building new ones and boosting production is economically prohibitive,” he adds.
The immediate solution? Ditch the outdated electric system. “Create the electrical system of the future with microgrids,” Brutoco suggests in an interview with Nearshore Americas.
“Ecuador can meet its future energy needs with biomass (currently 1.5%), wind (less than 1%), photovoltaic (less than 0.25%), and biogas (negligible),” Brutoco says.
Businesses on Edge
For businesses, the prolonged blackouts are more than an inconvenience—they’re a catastrophe. Protests have erupted across the country, and frustrated entrepreneurs are taking their grievances online.
“Ecuador’s economy is losing about $12 million per hour of blackouts,” Nathan Keffer wrote in a LinkedIn post. “It’s never an easy day running a business in Ecuador.”
The power outages haven’t stopped electricity bills from soaring. Many businesses report bills nearly identical to pre-crisis levels, despite operating for fewer hours.
“It’s like the electric company just copied last month’s bill and called it good enough,” Keffer laments.
He shared his personal struggle:
“In my apartment, the bill hasn’t changed despite having no electricity for hours. My nights are spent working by candlelight, yet I’m charged as if I’m running a broken Tesla,” he says.
His brewery’s electricity bill increased by $100, even though it consumed half the usual power.
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