Electricity Industry Strategies in Ecuador and Peru: Their Impacts on Energy Efficiency and Prices

Abstract

Through an empirical analysis of the impact of determinants on energy efficiency and electricity prices using monthly data, we compare the outcomes of energy strategies in Ecuador and Peru from 2014 to 2023. OLS regression models with Newey-West matrices are applied in two contexts: Energy efficiency and energy prices. Energy efficiency is explained through variables such as the proportion of renewable energies, national income, and the international oil price. The results indicate that in Ecuador, the proportion of renewable energies is positively related to energy efficiency, whereas in Peru, energy efficiency mainly depends on the trend component capturing changes in productivity and the decline in fuel prices. Furthermore, electricity prices are sensitive to fluctuations in oil prices, especially in Peru, due to its dependence on thermoelectric generation. The energy strategies of both countries, including the integration of renewables and the management of fossil fuel costs, play crucial roles in determining energy efficiency and prices. This study provides a comprehensive view of how various economic and structural factors influence the performance of the energy sector in both nations, highlighting the differences in their approaches and outcomes.