Source: demand expected to grow 2-3% a year

Demand for new installed capacity in Ecuador is expected to grow at 2-3% a year for the next few years, a source at US-based energy company Noble Energy told BNamericas. Demand in Ecuador is increasing 4-5% a year but power generation - currently about 2,000MW - is expected to grow slightly less, about 2-3% a year, because of efficiency improvements at distribution companies, said the source, who asked not to be named. Power losses are currently about 25% due to fraud and technical problems, but "distribution companies are slowly correcting some of those problems," the source said. Ecuador's largest distributor Emelec is embroiled in a dispute over its ownership. "They're not paying their bills and they're not paying their share of the generation to the generation companies because there must be four or five different entities all saying they either own Emelec or are running Emelec," the source said. The troubles at Emelec mean the grid operator, Cenace, at one point fell behind in payments to Noble's 130MW Machala thermoelectric power plant. However, those payments are nearly up to date, and Machala shouldn't suffer too much from now on because it falls into Cenace's 'Tier 2' payment level, which means it is second on the list to be paid after Tier 1 distribution companies have settled up their costs. Machala has received payment for half its May invoice and "June is not even due yet, so we're doing pretty well," the source said, adding it is still owed about US$2mn for May. Generators in lower tiers, including hydro generators, are not receiving all their money from Cenace, the source added. However, the late payment is "not a big issue at the moment" because in the summertime the cost of generation falls to about 2-3 cents a kilowatt hour while the distributors are collecting 8.5 cents, the source said. "The problem is in November, December and January when the thermo plants start generating and the price goes as high as 10 cents. They are still collecting 8.5 cents, so they fall behind on payments every winter," the source explained. A report in local newspaper La Hora said that Ecuador's thermo generation is down 14% because three large thermo generators, including Machala, are in maintenance. However, lower thermo generation is not a concern during the summer months when Ecuador's hydro generators meet most of the demand, the Noble source said, adding that Machala is only operating for a few hours a day at the moment as the plant undergoes annual maintenance. Machala's Unit B was shutdown June 7 and the company plans to complete the combustion inspection by July 5-6. It will take Unit A out of operation for maintenance on Monday (July 7) for three weeks, until July 28. The rotor blades in the two turbines need to be changed after every 8,000 hours of operations, the source added. "This is the time of year when [power regulator Cenace] don't have much demand for us because we are a peaking plant, so we usually take these units out during May, June and July to do these annual inspections," the source said. "In the summertime you typically only have a couple of thermo plants that are called on for generation, and the hydro plants handle the load the rest of the way," the source said, adding that thermo generation picks up again in September when water levels run low at the hydro plants.