Ontario-based Atlantic will build two solar plants totaling 58.43 megawatts in the Esmeraldas region of Ecuador. The project is the first approved under the country’s 40-cent per kilowatt hour feed-in-tariff.
“One of the reasons we were able to get these projects approved is that they’re in the Esmereldas region,” said Atlantic president Giles Trahan. “It’s one of the poorer regions. During the holiday season they lose power all the time. The fishermen come back and they can’t even make ice. It’s horrible.”
Atlantic is providing $2 million in warranties and paying half the cost of electricity infrastructure improvements in the area. The utility will pay the other half.
Atlantic established itself in Canada as Ontario started to develop its FIT. But countries with big FIT offers tend to become very competitive quickly and the political environment can make it tough to get solar projects approved.
“We decided to concentrate on emerging and developing markets,” Trahan said. “A lot of developed countries like Germany that had programs already have power generation and they’re looking to replace it.”
The politics involved with that can slow things down and make development a hassle, he said. Emerging markets are a different story.
“These countries have incredible speed,” Trahan said. “They’re trying to provide much needed extra power instead of replacing it. And if you’re going to start building new power generation these days, it’s pretty hard to ignore renewables now.”
Ecuador relies primarily on hydropower for its electricity generation, Trahan said. And that’s fantastic and affordable in wet seasons. Electricity costs residents just 2 to 4 cents per kilowatt hour. That low rate makes the 40-cent per kilowatt hour FIT all the more remarkable.
But, Trahan said, during dry years power is in short supply. And the last few years have been drier than usual. When Ecuador can’t produce its own power, it has to look to neighbors to import it and that can become astronomically expensive.
The idea behind a big FIT like the one Ecuador is offering now is to lure solar and wind companies to the region and enable them to establish themselves. Once the industry gains roots in the country, the prices will naturally fall and the country will be able to reduce its subsidy.
The country will approve up to 250 megawatts of projects at the current FIT rate, Trahan said.
Atlantic has 181 megawatts of solar projects planned for the country. Trahan said he doesn’t expect to get much more in this first round.
“We knew we weren’t going to get the whole thing, but we believe there will be new versions of the regulation at slightly reduced rates,” he said.