Ecuador moves ahead in transformation of energy grid with IDB support

IDB loan is one of a series supporting energy sector reform to reduce use of fossil fuels

The Inter-American Development Bank approved a $280 million loan to Ecuador to support transformation of its its enery grid, improvements in energy efficiency and promotion of access to electricity generated from renewable sources.

The loan aims to support the country in its climate change goals in the energy sector and help consolidate its fiscal and external accounts through policy reforms. This second and final operation is one of a series of loans that aim to support change in Ecuador's energy grid.

Ecuador accounts for approximately 0.08 percent of the planet's greenhouse gas emissions. Although that figure is low compared to other countries with similar features, Ecuador has committed to reducing 9% of its emissions by 2025 with respect to current trends?

The support of the IDB means a lot to Ecuador, especially in the current context in which fiscal revenue is forecast to post a major decline as a result of the impact of the coronavirus pandemic, which will be particularly rough in Ecuador as an oil producer.

Ecuador continues working to reduce its consumption of fossil fuels and has done so through reforms of its energy grid. “Sectoral policies such as those that Ecuador has been implementing are essential for improving the performance of the electricity sector. The evidence is clear that reforms of sectoral policies can lead to an increase in investment and in quality of service by improving the efficiency of the electricity sector and its financial sustainability,” said Virginia Snyder, director of the project team.

The loan is also designed to support efforts to enhance efficiency, modernization, innovation and sustainability in the supply of electricity and the exchange of electricity with neighboring countries. This will help ensure Ecuador's national supply in possible scenarios involving adverse conditions.