The government of Daniel Noboa has signed an addendum to the contract for the Villonaco II wind energy project, marking the beginning of its reactivation. Construction of the project, located in Loja, is expected to take at least 24 months. The 110 Megawatts generated by the project could be available by March 2027.
The Villonaco III wind project, also located in Loja, was initially launched under the government of Guillermo Lasso in July 2023. However, its construction never progressed. Now, with an addendum signed by Minister of Energy and Mines, Inés Manzano, and the Spanish consortium Cobra Villonaco Energy, the project is set to move forward. The contract was originally awarded in 2020 under the presidency of Lenín Moreno.
As of January 16, 2025, the reactivation is underway. Eduardo Mora, country director of Cobra Villonaco Energy, announced that civil work on the project could start within three months.
“This project, located 3,000 meters above sea level, is one of the most challenging wind energy projects in the world,” Mora explained. Initially, the investment was expected to be $181 million, but it has since increased to $200 million. The state will pay $84.42 per megawatt hour for the energy produced.
Delays in Villonaco III Construction: Causes and Solutions
The delay in the Villonaco III project stemmed from difficulties in establishing a payment mechanism for the private company involved. One proposed solution involved using a trust fund to guarantee payment for the electricity generated, ensuring that the private company could recover its investment. However, this plan was rejected by unions of public companies.
Ultimately, a new mechanism was established, which prioritizes payments to private companies. If the payment is not made by the electric generation companies, the state has committed to stepping in. If the state also fails to pay, a contingency fund financed by the Inter-American Development Bank (IDB) will cover the costs.
Mora called the agreement a significant step for private sector investment in Ecuador’s energy sector, noting that ten additional renewable energy projects have already been awarded to private companies, with more set to begin soon.
Inés Manzano, the Minister of Energy, highlighted that the success of the addendum was made possible by support from both the IDB and the United States Agency for International Development (USAID).
“This is a crucial step in strengthening Ecuador’s energy system,” Manzano stated. To reach this agreement, changes to regulations were also necessary.
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