El Salvador Transforms its Energy Matrix

Wednesday, October 14, 2015

El Salvador’s National Energy Council (CNE) and the Office of the Superintendent of Electricity and Telecommunications have worked with all players in the electricity sector to create the conditions needed to reach this objective.

The first phase of this effort involved making adjustments to the regulatory framework at every level— laws, rules, and regulations—to promote generation from clean energy sources and create incentives for private investment. This enabled a second phase of energy diversification to begin in 2013, in which three electric power projects were put out to bid:

The first resulted in a contract to provide 338 MW of natural gas-fired electricity, beginning in 2018;

The second resulted in a 94 MW contract for four photovoltaic solar projects, beginning in 2016; and

The third project involves a contract to provide 12.1 MW of small-scale distributed generation derived from different sources of non-conventional renewable energy (11.16 MW from solar, 0.45 MW from biogas, and 0.5 MW from small hydroelectric plants), beginning in 2016.

In addition to those projects, before the end of this year El Salvador hopes to issue a tender for 150 MW of energy, which would be geared toward projects based on non-conventional renewable energy resources for the exclusive participation of the wholesale market. These projects are expected to enter into operation in 2018.

The amount of power put out to bid in 2015 was determined based on a specialized study undertaken to determine the potential for wind and solar power that could be incorporated into the energy matrix. The study, which was carried out with the support of the U.S. Agency for International Development (USAID), analyzed the maximum amount of power that could be added to El Salvador’s electric system in the medium term with non-conventional renewable sources while guaranteeing the security and reliability of the national and regional electric grid.

Companies that are awarded bids must take on and implement social development programs to benefit families in the project’s neighboring communities, once the power plant goes into operation.

The following graphs compare El Salvador’s 2014 national energy production (not including imports) with its projected production in 2018, once the projects associated with these bids are completed, as well as other projects being planned by public power companies.

As can be seen in these graphs, renewable sources (hydro, biomass, geothermal, solar, and wind), which now account for about 58 percent of electricity production, are expected to increase to 62 percent by 2018. The proportion of electricity generated from fossil fuels will go down, from 42 to 38 percent, with natural gas accounting for 31 percent and only 7 percent still generated from bunker fuel.

Finally, it is important to note that El Salvador will continue to work on adjusting its current regulations to enhance conditions conducive to increased penetration of clean energy generated from non-conventional renewable sources, and will continue transforming its energy matrix in order to achieve sustainable development.