Ecuador is located on the west coast of the South America and is crossed by the equator (the country gets its name from the Spanish word for "equator"). It has an area of 283.561 km² and a population of around 16.86 million inhabitants. The climate varies with the region, most of the coast consists of wet, tropical forest, increasingly humid environment toward the north. The cold Humboldt Current which flows northward along the coast of Peru and then heads out into the Pacific off the coast of central Ecuador, limits the rainfall on a strip of the coast extending from as far north as the Bay of Caraquez and widening to include most of the coastal lowlands south of Guayaquil. In the Guayaquil area there are two seasons: a hot rainy period, lasting from January to May; and a cooler dry season, during the rest of the year, when sea breezes modify the equatorial heat. The climate of the central plateau is governed mainly by the altitude. The capital, Quito, at 2,850 m, has perpetual spring, with an average temperature of 13°c and about 1270 mm of rainfall annually. The highlands are cut by numerous deep valleys, which bring subtropical climates to within a few miles of the more temperate areas. The average annual rainfall is variable over the country, depending on location and elevation, and ranging between 300 mm on the south coast and 5,000 mm in the Amazon Basin.

The three main water systems are the Esmeraldas River in the north and the Guayas in the south and of course the Amazon in the east. The Esmeralda begins as the Guayllabamba River in the Sierra, flowing west before emptying in the Pacific, near the city of Esmeraldas. The Guayas forms to the north of Guayaquil, where the Daule and Babahoyo Rivers converge. The Babahayo arises from its tributaries in the Andes. Many rivers from the Andes flow east to the Amazon River, including major rivers like the Pastaza, Napo, and Putumayo.

Ecuador has a tremendous potential for hydropower having more rivers per square kilometre than any other country in the world and therefore it provides a lot of potential for hydropower. Already now, around 60 % of the installed capacity comes from hydropower (national electrification rates: Total 97.2 %, Urban: 98 %, Rural: 91.6 %).

The hydropower sector in Ecuador is divided in four groups: 1) Hydroelectric projects of large capacity (power > 50 MW), this group includes 25 hydropower projects with that generate power between 51.1 MW and 3600 MW, 2) Hydroelectric projects of medium capacity (power between 10 and 49.99 MW), this group includes 50 hydropower projects, 3) Hydroelectric projects of small capacity (power between 1 and 9.99 MW) that include 39 hydropower projects, and 4) Hydroelectric projects less than 1 MW, this group includes 76 hydropower projects.

The provision of energy from hydropower is in line with the national goals, in which Ecuador not only wants to reach self-sufficiency through clean energy production but also potentially export energy to neighbouring countries. The political goal has already found its way into the Constitution of the Republic of Ecuador in which Article 89 mentions that the State will take measures aimed at achieving the following objective: Promote the use of environmentally clean technologies and non-polluting alternative energies in both public and private sector.

Although the aim is set in Ecuador, due to different political decisions, there is a mismatch of supply and demand of the national electricity system. The gathered experts of the HYPOSO project will provide political, regulatory and financial frameworks to optimise the integration of SHP in the system and pave the way for a significant increase of SHP.