El Salvador - Country Commercial Guide

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-09-30


In 2019, El Salvador’s electricity generation traded in the wholesale energy market was 6,481.7 GWh while demand was 6361.4 GWh. Total exports to other markets in Central America were 64.83 GWh and imports were 1,449.7 GWh, mainly from Guatemala.  Electrification is above 99% of the population in urban areas and 100% in rural areas.   

In 2019, the generation sources in the market were broken down as follows: 22.25% hydroelectric, 21.17% geothermal, 24.77% thermal, 8.55% biomass, 3.34% solar, and 19.23% imports to meet the country’s requirements for electricity demand.  

The electricity market in El Salvador was deregulated and utilities were restructured in the 1990s. 

Subsequently, private and public companies participate as producers, retailers, energy traders and large consumers.  The generation market share is divided as follows: 47% State owned, 30% multinationals, and 23% local operators.  The distribution market share is divided between 97% multinationals and 3% local distributors. El Salvador’s strategy is developed by the government and is primarily focused in energy efficiency and promoting participation of renewable energy (solar, wind and biogas). The market is made up of purchase power agreements (PPA) awarded in competitive auctions supervised by the regulator and the Spot Market. Transmission is State owned, and the market is regulated by the Superintendencia General de Electricidad Y Telecomunicaciones (General Superintendent for Electricity and Telecommunication - SIGET). 

El Salvador’s policy is to expand the country’s natural resource capacity to decrease fossil fuel dependency. To this end, in 2007, the Salvadoran government passed Decree 462 which grants tax breaks to companies who develop renewable energy projects and provides for 10 years of import tax exemptions for purchases of machines and equipment. In addition, the Salvadoran Government released the 2010-2024 National Policy the purpose of which is to modernize and expand the country’s natural resource capabilities in order to increase the contribution of these energy sources to the national energy supply.   

Private sector companies, NGOs, and regional banks develop relationships with Salvadoran counterparts such as SIGET, the Ministry of the Environment and Natural Resources (MARN), and National Energy Council (CNE) to create solar, hydroelectric, wind, thermal and biomass energy projects. To date the country has developed hydroelectric and geothermal capabilities with an installed capacity of 552.69 MW in hydroelectric power and 204.4 MW in geothermal. In addition, the government is attracting private sector companies for geothermal, solar, biomass, and wind capacities.   

Challenges that companies must prepare to face and be ready to address include:   

  • Political decisions that impact the companies operating in the energy market such as subsidies for households and executive branch mandates to deferred payments without federal budget. 
  • Unmet investment levels in electricity transmission infrastructure to provide reliable electricity, congestion relief, to promote a robust wholesale market competition. 
  • Increase costs due to delays on land use permits, negotiations, contracts, and community relations.   

Leading Sub-Sectors 

The government is receptive to expanding the renewable energy sector, especially in areas that take advantage of the country’s vast water sources, and large amounts of sunlight.  Biomass, wind, solar, hydroelectric, and geothermal energy opportunities exist in the country. In order to facilitate these projects, organizations such as: The Inter-American Development Bank, USAID, BCIE, and the U.S. International Development Finance Corporation (DFC, formerly Overseas Private Investment Corporation) fund major energy projects within the country.


There are five biomass plants in El Salvador. The plants include: Izalco, Chaparrastique, El Ángel, Injiboa, and La Cabaña. In 2019, these five plants produced 551.58 MWh of electricity. In addition, the Nejapa landfill receives the solid waste from San Salvador with a total installed biogas capacity of 6.4 MW, there is the potential to increase the capacity by up to 10 MW.  

El Salvador has created projects in anaerobic bio digestion as an alternative to the traditional practices of removing organic wastes. There are three installed systems including: Granja de los Hermanos Jovel (717 m3), Avícola Campestre (6,600 m3), and Agroindustrias San Julián (1,200 m3). 


Wind data assessed by El Salvador’s Consejo Nacional de Energia (Energy National Board, CNE) identified locations with winds reaching higher than 400 W/m2 to 50 meters above the ground level as potential sites for wind farms. Fiscal incentives and purchase power agreements led to the development of the first 54 MW wind farm in El Salvador.  


The central region of El Salvador receives a high level of solar radiation (5.3 kWh/m2/day). Therefore, photovoltaic systems are an opportunity to take advantage of the country’s vast solar resources.

Most solar panels are installed in government buildings, schools, manufacturing plants, and universities. In 2019, 31 companies generated 489.6 MW of photovoltaic electricity, four of these companies participate in the wholesale market with a total generation of 216.8 MW.  


There are four hydroelectric dams located in the Lempa River. The following plants on the Lempa include: Guajayo (19.8 MW), Cerrón Grade (172.8 MW), 5 de Noviembre (99.4 MW), 15 de Septiembre (180 MW). These plants are overseen by the Río Lempa Hydroelectricity Board (CEL).  The country has a total of 20 power plants with an installed capacity of 552.6 MW. According to the Government’s Master Plan published in 2019, 18 sites with the potential for capacities greater than 20 MW were identified and 209 sites with capacities less than 20 MW. The total potential hydroelectric production capacity of El Salvador’s sites are 2,258 MW of Hydroelectric energy is obtainable during the rainy season (May-October).  


El Salvador has the highest level of geothermal production in Central America. The country has an installed capacity of 204.4 MW within two geothermal installations. Report by the National Energy Council (CNE) locates 12 geothermal sites in El Salvador with underground temperatures estimated above 150° C (high enthalpy), and 12 geothermal sites with underground temperatures estimated between 90 to 150° C (low enthalpy). The geothermal potential in both categories equals 791 MW in total and increases the potential generation capacity by 25.8%. 


The Government of El Salvador is actively looking to attract investors to expand the country’s renewable energy capacity, which translates into opportunities for companies that can provide for needs ranging from technology to equipment procurement to consultancy services. Electricity projects under development include 65.7 MW hydroelectric El Chaparral, a 380 MW LNG power plant, 96 MW wind farms, 4.5 MW biogas/solar/hydro project, 15 MW geothermal, and 20 MW photovoltaic. There is demand for: 

  • Solar cells and panels 
  • Generators 
  • Small Hydroelectric systems 
  • Consulting services  
  • Energy storage 

 Web Resources 

Salvadoran government’s Renewable energy Master Plan 

World Bank Data Access to Electricity 

Renewable Energy Portal 

Sustainable development NGO  

Organization of Latin American Energy  

The Inter-American Development Bank  

Central American Bank for Economic Integration 

Development Bank of El Salvador  

Annual Energy Congress  

Official Salvadoran Government Procurement website  

 U.S. Commercial Service Contact 

Maria Irene Rivera, Senior Commercial Specialist, maria.rivera@trade.gov