Chapter 2. Presenting Case: Ecuador’s Coca-Codo-Sinclair
sufficient energy (measured in megawatts produced per unit of time, i.e., MW/h). Countries that rely on hydropower to meet energy needs have an incentive to optimize their portfolio of plants in such as way as to avoid problems associated with water shortages. As will be discussed in Chapter 3, Brazil is the paradigmatic example of a hydro-based system with centralized optimization of water resources. The gradual development of Hidropaute significantly cleaned Ecuador’s energy mix—a relative success of state-driven energy infrastructure development. Its scale reduced the need for imported fuels for thermal plants, thus decreasing the cost of energy and improving security. However, it is a risky proposition to rely on a single, large-scale plant, complemented by a handful of smaller hydro projects of no more than 200MW in capacity. Scholars refer to the experiences from the 70s as examples of the “entrepreneurial state,” modeled after the Gerschenkronian premise that developing countries, late-starters in the path toward industrialization, needed direct state intervention to advance local economic activity. (Gerschenkron, 1962; Hirschman, 1968) In the electricity sector, the Ecuadorian government’s ‘entrepreneurial’ record is mixed in this regard. Since the drafting of the first hydrological inventories, large hydroelectric projects have always played a central role in power generation—at least hypothetically. By 1989, as stated in its 1989-2000 long-term electricity expansion plan, INECEL had identified 21GW of economically feasible projects, 90% of which were located in Amazonian rivers. (CONELEC, 2009) Yet, the country’s potential remains largely untapped. Beginning in the 1980s, the so-called ‘lost decade,’ there were at least three factors that significantly hemmed in large dam building efforts. Ecuador and other countries in the region entered an external debt crisis and adopted structural-adjustment programs. Funds dried up for large infrastructure projects and public investments; CCS and other projects were shelved, or repeatedly postponed. Second, around the world, multilateral organizations and private financers became much more risk-averse, not only from a financial perspective, but also due to the alarming environmental and social impacts of projects. (McCully, 2001) These included !
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