Ecuador to Cut Taxes on Imported Power Generation, Storage Equipment

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Written by Amir Richani for IIR News Intelligence (Sugar Land, Texas)

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Summary

Ecuador's President Daniel Noboa announced plans to remove taxes on imported equipment for electricity generation and energy storage to encourage new investments.

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New Announcement

Ecuador's President Daniel Noboa and his Secretary General for Public Administration Jose Neira said in an interview in Radio Centro on October 5 that the government would eliminate the value-added tax (VAT) and foreign-currency exit tax (ISD) on imported equipment for private electricity generation and energy storage projects.

The measure seeks to attract private investments into Ecuador's power generation sector. The exeptions would include large-scale private developers and industrial sectors or businesses seeking to develop their own electricity, which could help reduce demand on the national grid.

Generation Shift

The South American country's hydropower plants are facing pressure due to droughts that are constraining their operations. As a result, Ecuador is relying more on thermoelectric plants to generate electricity, and the government has contracted two power barges to help supply the required demand.

"These are the weeks of greatest drought. These three weeks affect us every year. Even so, we are managing to meet (energy demand)...no Ecuadorian family will experience any power outages," said the president during the interview.

Neira reported that 655 megawatts (MW) of new thermoelectric generation capacity are expected to come online by April 2027, while 12 solar projects have received government approval since July. The 655 MW capacity to be added next year is likely related to rented internal combustion engines to be installed at existing Corporacion Electrica del Ecuador (CELEC) substations and generation plants.

Industrial Info Resources is tracking 56 solar and wind power generation projects in Ecuador, totaling US$2.08 billion in investments. Meanwhile, another 34 hydroelectric projects have also been mapped by IIR in Ecuador, amounting to US$2.31 billion in investments.

By the end of 2025, Ecuador's power generation capacity stood at 9,449 MW, with 57% of that capacity coming from hydropower, according to the National Electricity Regulator (ARCONEL). In terms of total electricity supply in 2025, hydropower plants accounted for 73.61% of domestic electricity generation, followed by 24.72% from thermal plants. Solar and wind power generation accounted for less than 1% of total power generation.

In 2025, 537 MW of new power generation came online, according to ARCONEL.

The tax exemption proposed by Noboa also seeks to encourage energy storage projects, which can help balance electricity supply during periods of peak demand.

Electricity Tariff

During his interview with Radio Centro, Noboa defended the temporary electricity price increase for high-voltage consumers, citing higher costs for fuel used by Ecuador's thermoelectric plants.

Noboa attributed the fuel price increase to the conflict between Iran and the United States.

In 2024, Ecuador also faced a severe electricity crisis that led to blackouts around the country.

Key Takeaways

• Ecuador's president plans to eliminate VAT and the foreign-currency exit tax on imported equipment for private electricity generation and energy storage projects.
• The measure aims to promote investments in power generation to boost capacity.
• Hydropower accounted for 73.61% of domestic electricity generation in 2025.

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