By Daphne Posadas

In recent weeks, Ecuador has faced a severe energy crisis, with power outages lasting up to 10 hours daily, affecting millions of citizens. The main causes are a prolonged drought and a highly centralized electricity sector.

The drought, which has been the worst in 6 decades, has reduced water levels at hydroelectric dams to historic lows, impacting plants that generate over 70 percent of the country’s electricity. Most of these hydroelectric plants are operated by Ecuador’s state-owned utility company, CELEC, concentrating energy provision in the hands of the government.

You may wonder why Ecuador is so dependent on hydro for energy. The truth? Efforts to diversify the energy mix have stalled due to strong resistance to alternatives, a growing diesel shortage, and missed opportunities to use gas. This puts Ecuador in a risky spot, with its energy supply tied entirely to rainfall. Ecuador’s one-dimensional approach to energy is only becoming costlier as droughts grow more intense.

The electricity market is traditionally divided into four........

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