Overview

El Salvador’s energy sector is characterized by a diverse and increasingly modern energy matrix, with a strong emphasis on renewable sources. The country has made significant progress in expanding and diversifying its energy portfolio to improve security, reliability, and sustainability.

As of the end of 2024, El Salvador’s total installed electricity generation capacity reached 3,101.24 MW, according to the General Superintendency of Electricity and Telecommunications (SIGET). Renewable energy accounts for approximately 62.53% of the national capacity. Regarding net generation, renewable sources contributed 68.3% of the total electricity produced, while non-renewable sources accounted for 31.7%. Hydropower, generated by five state-owned dams, continues to play a significant role, although output varies seasonally. Geothermal energy, also state-operated, leverages the country’s volcanic geology and provides a stable baseload, representing a key pillar of El Salvador’s renewable mix. Biomass, derived primarily from sugarcane byproducts, and wind power contribute additional seasonal or intermittent supply.

Solar photovoltaic (PV) energy has experienced the fastest growth, with installed capacity reaching approximately 633 MW by 2024, nearly equaling the share of hydropower. El Salvador’s first wind farm became operational in 2021, further expanding the country’s range of renewable energy sources.

A significant non-renewable development is the Energía del Pacífico liquefied natural gas (LNG) power plant in Acajutla. With a capacity of 380 megawatts, this plant supplies over 30% of the country’s electricity demand. It represents the most significant private infrastructure investment in El Salvador, valued at over USD 1.15 billion. Developed by U.S.-based Invenergy and financed by international institutions, including the U.S. Development Finance Corporation (DFC) and the Inter-American Development Bank Invest (IDB-Invest), it is the country’s most efficient thermal power plant and supports the transition to cleaner fuels.

To enhance its energy diversity and strengthen long-term energy security, El Salvador has started exploring nuclear power as a future option. In July 2024, the Legislative Assembly approved the establishment of the Organization for the Implementation of the Nuclear Energy Program (OIPEN), which is responsible for conducting feasibility studies, planning, and coordinating nuclear initiatives. In October 2024, the Assembly enacted the Nuclear Energy Law, creating a comprehensive regulatory framework that addresses site selection, licensing, safety protocols, and environmental standards. In February 2025, the government also signed a memorandum of understanding with the United States to collaborate on civil nuclear energy, marking its first step toward assessing the feasibility of nuclear power. Additionally, El Salvador is collaborating with the International Atomic Energy Agency (IAEA), which has provided technical assistance, including the deployment of experts for preliminary site assessments. The country plans to pilot its first small modular reactor (SMR) by 2032 as part of its strategy to integrate advanced nuclear technologies into its energy mix.

El Salvador’s electricity sector comprises a mix of state-owned and private players operating under a liberalized market framework regulated by SIGET, with policy oversight from the General Directorate of Energy, Hydrocarbons, and Mines (DGEHM). On the generation side, a significant portion of capacity is state-owned, complemented by international companies, including notable U.S. investments. Smaller local energy projects, especially solar, also contribute to the generation mix.

The transmission infrastructure is wholly state-owned and managed by ETESAL, a subsidiary of ENTE (Ente Nacional de Transmisión Eléctrica), the autonomous public institution responsible for planning, expanding, and overseeing the national transmission grid. Electricity distribution is dominated by two leading companies: AES El Salvador, a U.S.-based firm headquartered in Virginia, which delivers roughly 80% of the country’s electricity through its four distributors (CAESS, CLESA, EEO, and DEUSEM) covering the central-north, western, and eastern regions. AES also generates power through projects such as the DFC-backed Bosforo solar portfolio (10 solar plants of 10 MW each) and is advancing into the electric vehicle market by installing charging infrastructure. The remaining 20% of electricity distribution is served by Distribuidora de Electricidad del Sur (DELSUR), covering the central-southern region. The electricity market is primarily composed of power purchase agreements (PPAs) awarded through competitive auctions supervised by the regulator, alongside a Spot Market that facilitates real-time energy trading to ensure supply-demand balance and price transparency.

El Salvador actively participates in the Central American Regional Electricity Market (MER), promoting regional integration and cross-border electricity trade. El Salvador can meet domestic demand while supplying surplus electricity to neighboring markets, thanks to its diversified energy mix, which includes liquefied natural gas (LNG), stable geothermal output, and an expanding solar portfolio. The country continues prioritizing renewable energy development, grid modernization, and energy efficiency, reinforcing its role as a reliable and strategic energy partner in Central America.

Although El Salvador’s energy sector has made significant progress, it still faces challenges that affect market stability. Government decisions, like household subsidies and government mandates for deferred payments without clear budgets, create financial uncertainties for companies. This situation is further exacerbated by a changing regulatory landscape, which complicates the market and makes it less predictable. Additionally, limited investment in transmission infrastructure decreases reliability, congestion management, and the development of a competitive wholesale market. Project development is further delayed by issues such as obtaining land use permits, contract negotiations, and community involvement, resulting in higher costs and longer timelines.

Leading Sub-sectors

• Biomass
• Wind
• Solar
• Hydroelectric
• Geothermal
• Liquefied Natural Gas (LNG)
• Nuclear

Opportunities

The energy sector is one of the most dynamic in El Salvador. Recent policies and the government’s push to diversify the energy mix have significantly increased the demand for equipment, technologies, and consultancy services. Additionally, as one of the government’s key goals is to attract foreign investment, particularly in industrial and technological development, electricity demand is expected to rise accordingly. These efforts are complemented by initiatives to reduce and stabilize electricity prices, which further support sector growth.
Below are some of the key opportunities in El Salvador’s Public Energy Sector:

Nuclear

El Salvador is advancing its nuclear energy program. In July 2024, the government established the Nuclear Energy Program Implementation Organism (OIPEN) to oversee nuclear policy and planning, followed by the passage of the Nuclear Energy Law, which establishes a legal framework emphasizing the peaceful use of atomic energy and prohibits its military applications. In February 2025, El Salvador signed a Memorandum of Understanding (MOU) with the United States, focusing on small modular reactors (SMRs) and regulatory training. The United States and El Salvador have also begun preliminary steps toward negotiating a 123 Agreement, which would establish the framework for cooperation on U.S. nuclear energy products and technology, including the supply of reactor fuel. The country is also working with Argentina, Spain, and the IAEA to build capacity and explore nuclear applications. These steps open opportunities for U.S. companies in nuclear technology, equipment, and services to engage early in El Salvador’s emerging atomic sector.

Solar

Solar energy is one of the fastest-growing renewable sources in El Salvador, requiring solar technology like solar cells, panels, energy storage, and all related equipment and expertise for its operation.  

• Universal Energy Access Program in El Salvador by the Inter-American Development Bank (IDB): This program aims to expand full access to electricity and other essential services for all Salvadoran citizens by 2030, with a focus on sustainability and renewable energy. This includes extending the electricity distribution network, implementing photovoltaic microgrids with energy storage, and promoting the productive use of energy. 
• Floating solar photovoltaic (PV) Plants: Between 2025 and 2033, INE aims to install approximately 186.27 MWp of floating solar capacity. A public tender is expected in 2025 under an EPCF (Engineering, Procurement, Construction, and Financing) model for a 100 MW floating solar plant, to be executed in four stages. U.S. companies with experience in EPCF, project management, and financing capabilities will be well-positioned to compete. These developments offer substantial opportunities for firms providing solar technology, engineering services, project management, and financing solutions.

Geothermal

El Salvador leads Central America in geothermal energy production and is a benchmark in this field. It has an installed capacity of 209 MW, with 185 MW currently supplied to the grid. The country’s primary geothermal fields, Ahuachapán and Berlín, along with a small wellhead in San Vicente and Chinameca, are all operated by the state-owned company LaGeo. Several upcoming projects present business opportunities, particularly in geothermal technology, drilling services, engineering, and project financing.

• Chinameca field: As part of a USD 150 million World Bank–funded program, LaGeo plans to develop eight new geothermal wells and to build a 25 MW power plant. A public tender for the wells is expected to be announced in 2025. A separate 20 MW expansion, involving a new substation and transmission line, is planned under an EPCF+ model, creating opportunities for firms with the capacity to both execute and finance infrastructure projects. Operations are anticipated by 2028.
• San Vicente field: LaGeo intends to upgrade the existing wellhead by 2027 and explore a complete expansion by 2030, subject to securing financing. 
• Berlin and Ahuachapán fields: While both plants operate at full capacity, there may be near-term opportunities for equipment upgrades and sustainability-related improvements.  

Biogas

In June 2024, El Salvador signed a USD 83 million loan with the Saudi Fund for Development to build a wastewater treatment and biogas power generation project, to be executed by state-owned energy company CEL. The project will improve water quality and produce renewable electricity, benefiting over 1.2 million people. U.S. companies may find opportunities in the estimated USD  20 million in complementary works, including engineering and infrastructure services, as well as in consultancy services for project supervision.

Resources

• Executive Hydroelectric Commission of the Lempa River (CEL) 
• LaGeo 
• Inversiones Energeticas (INE) 
• General Superintendent of Electricity and Telecommunications (SIGET) 
• General Directorate of Energy, Hydrocarbons, and Mines (DGEHM)   
• World Bank Data Access to Electricity 
• World Bank “El Salvador Geothermal Energy for Sustainable and Inclusive Development Project” 
• The Inter-American Development Bank (IDB) 
• Regional Energy Congress of El Salvador (COREN) 
• Central Reserve Bank (BCR)

Information 

Interested parties may contact Commercial Assistant Daniela Portillo at Daniela.Portillo@trade.gov.