El Salvador Advances Renewable Energy with $150 Million Geothermal Project

World Bank Supports Sustainable Energy Growth to Boost Economic Development.

The World Bank’s Board of Executive Directors has approved a groundbreaking $150 million initiative aimed at expanding El Salvador’s renewable electricity generation capacity and promoting direct geothermal heat utilization. This six-year project, officially named the “El Salvador Geothermal Energy for Sustainable and Inclusive Development Project,” seeks to harness underground thermal energy to provide a sustainable, cost-effective power source while supporting local economic activities.

Enhancing Geothermal Resource Utilization

The initiative will focus on multiple areas of improvement, including geothermal resource exploration, evaluation, power plant construction, and comprehensive social and environmental programs. By tapping into its abundant geothermal potential, El Salvador aims to diversify its energy mix, reduce dependence on fossil fuels, and offer cleaner electricity options to its citizens.

The project’s primary objectives include:

• Conducting exploratory geothermal studies to evaluate and maximize the potential of existing fields.

• Constructing a 25-megawatt (MW) geothermal power plant in the Chinameca Geothermal Field, located 115 km east of San Salvador.

• Integrating the new plant into the national power transmission grid to improve electricity distribution.

• Supporting local communities with direct geothermal heat applications, particularly in agribusiness.

Economic and Social Impact

Beyond energy production, this initiative will provide direct economic benefits to surrounding communities. Geothermal heat will be utilized in food drying and processing, enabling the growth of local agribusinesses and strengthening economic resilience. Job opportunities will also increase during both the construction and operational phases of the project.

“The government is committed to ensuring that all Salvadorans have access to clean and affordable energy,” said Daniel Alejandro Alvarez, President of the Lempa River Executive Hydroelectric Commission (CEL). “This World Bank-financed project is an important step in strengthening our energy system and promoting sustainable and inclusive development.”

The implementation of this initiative is entrusted to LaGeo, a state-owned company specializing in electricity generation from geothermal resources. LaGeo will spearhead the development of up to 40 MW of additional renewable energy capacity at the Chinameca site, further reinforcing the country’s energy security.

Strengthening Energy Stability and Economic Growth

One of the key benefits of this initiative is improved energy stability. The geothermal plant’s operation will help El Salvador manage energy demand more efficiently and minimize supply disruptions. This is particularly critical for essential services such as hospitals, schools, and businesses, ensuring a steady electricity supply.

Carine Clert, World Bank Country Manager for El Salvador and Costa Rica, emphasized the global significance of this project, stating, “This project is a testament to our longstanding working relationship with the government of El Salvador as we build a more resilient and prosperous future. We will work closely with LaGeo to ensure that the project will be successful and help reduce emissions and create green jobs.”

Financial Framework and Future Prospects

The project is financed through a loan from the International Bank for Reconstruction and Development (IBRD). The terms of the loan include a 30-year maturity period with a six-year grace period, providing El Salvador with financial flexibility for project execution.

By leveraging geothermal energy, El Salvador is taking a significant step toward sustainable development, positioning itself as a leader in clean energy adoption in Central America. This initiative is expected to pave the way for future renewable energy investments, attract technological advancements, and foster a more resilient economy driven by green energy solutions.

With continued support from international partners and strong governmental commitment, El Salvador’s transition to a sustainable energy future appears promising, offering both environmental and economic benefits for generations to come.