The Villonaco III wind energy project in Ecuador will be ready in 2027

The Government of Daniel Noboa signed an addendum to the contract and with that managed to reactivate the Villonaco II wind energy project. However, construction will take at least 24 months. This means that the 110 Megawatts of this project, located in Loja, could be available from March 2027.

The concession and investment contracts for the Villonaco III wind energy project were signed in July 2023, during the government of Guillermo Lasso. However, the construction and operation of this project, located in Loja, which plans to contribute 110 Megawatts (MW) to the Ecuadorian electrical system, never advanced.

At the beginning of 2025, the situation took a turn because the Minister in charge of Energy and Mines, Inés Manzano, has just signed the addendum to the Villonaco III contract with the Spanish consortium Cobra Villonaco Energy. This will allow the construction of the project, which was awarded in 2020 in the Government of Lenín Moreno, to begin.

After the signing of the addendum, the project will be reactivated from January 16, 2025 and the civil work could begin in three months, said Eduardo Mora, country director of Cobra Villonaco Energy.

“It is a project that will be located in an area 3,000 meters above sea level, it is the most difficult wind project in the world that will be done,” said Mora. Initially, the investment was going to be $181 million, but now it will be $200 million. The rate that the State will pay is $84.42 per megawatt / hour.
Why was the construction and start of operations of Villonaco III delayed for so long?

The main reason for the obstacles and delay was that there was no way to establish a mechanism that the State would use to pay the tariff to the private company.

A first option was that the payment would be made through a trust, where the priority of payment for the electric generation that the project would deliver would be guaranteed.

The aim was to ensure that the private company would recover its investment, but the proposal fell through due to the rejection of the unions of the public companies.

Finally, the mechanism that was established was a priority of payments in the electric generation companies where the private companies are paid first. If they do not pay, there is a commitment from the State to pay.

And if, in turn, it does not pay, there is a contingency fund financed by the Inter-American Development Bank (IDB), which will be used to pay the private companies.

“This is the beginning of a transformation in which the private sector will be able to invest in the energy sector in Ecuador,” said Mora.

The representative of Grupo Cobra recalled that there are another 10 renewable energy projects already awarded to the private sector, which are also waiting to be started.

Minister Manzano said that the signing of this addendum to the contract was possible thanks to the support of the IDB and the United States Agency for International Development (USAID).

“This is a transcendental step that will strengthen the Ecuadorian energy system,” said the Minister of Energy, Inés Manzano. She added that in order to achieve this addendum to the contract, it was necessary to make changes to regulations.