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El Salvador (2012)
Source: REEEP Policy Database (contributed by SERN for REEEP)
Energy sources
Total installed capacity (2010): 1,481.1 MW.
Thermo-electricity: 53.36%.
Hydro-electricity: 32.84%
Geothermal: 13.8%
Gross electricity generation in 2010 was 5,877.6 GWh, of which 40% came from traditional thermal sources, 38% from hydroelectricity, 20% from geothermal sources and 2% from biomass.
El Salvador is Central America’s largest producer of geothermal energy.
Reliance
In 2007, El Salvador imported 11.08 million kWh of electricity from Guatemala and Honduras.
Crude oil is imported from Venezuela to meet thermoelectric energy demand.
Extend network
National electrification rate (2010): 91.2,%:
Urban areas: 99%
Rural areas: 72%.
Capacity concerns
High dependence on oil imports. Spiralling global oil prices can cause electricity shortages.
Close Capacity concernsRenewable energy
Hydropower
In 2007, the Central American Bank for Economic Integration (BCEI) approved US$140 million for the construction and start-up of 64.4-MW EL Chaparral hydroelectric plant.
Wind energy
El Salvador currently has no wind power generation. Following studies by the Comisión Hidroeléctrica del Rio Lempa (CEL) and the Finnish Meteorological Institute (FMI), the National Energy Commission´s power generation expansion plan 2012-26 sets out a plan to construct a 42 MW wind farm in Metapan in Western El Salvador by 2016.
Geothermal energy
The 2007 National Energy Strategy determines that potential geothermal capacity in El Salvador is about 450 MW.
Currently, there are two geothermal facilities operating in El Salvador, the 95-MW Ahuachapan, and the 66-MW Berlin plant. Majority state-owned power company LaGeo, formerly Gesal, operates the two plants. LaGeo has expanded the two existing geothermal plants, as well as conducting a feasibility study for a third plant, Cuyanausul.
Expansion plans could result in 183 MW additional capacity in the period 2006-2014.
Biomass energy
In 2003, Empresa Eléctrica del Norte (EEN) announced the construction of a 5-MW Biomass thermoelectric plant at San Francisco Sugar Mill. The plant consumes part of the electricity generated by bagasse fuel and additional distribution agreements with other local sugar.
Biofuels
In September 2006, El Salvador opened an ethanol plant in Acajutla Port. The American Renewable Fuel Suppliers (ARFS) - comprised of U.S.-based Cargill, Brazilian sugar trader, Crystalsev, and El Salvador’s local sugar company, Compañía Azucarera Salvadoreña - developed the $13 million, 60 million-gallon-per-year (MG/Y) capacity plant. ARFS plans to export the ethanol to the United States where the company can take advantage of the Caribbean Basins Trade Partnership Act (CBTPA), a trade agreement signed in 2000 that allows Caribbean and Central American countries to export ethanol into the United States duty-free.
Energy efficiency
In 2006, the Superintendent of Electricity and Telecommunications launched an energy efficiency program to promote energy savings through helping people to identify the energy consumption of their electrical equipment.
In 2011 the program "El Salvador Saves Energy" was launched. It is the first cross-cutting initiative coordinated by the National Energy Council (CNE), in which public institutions, private companies, universities and civil society representatives committed themselves by signing a Memorandum of Understanding to join efforts to push the topic of saving and efficient use of electricity, based on the National Energy Policy.
The campaign, "Save Energy El Salvador " aims to promote, strengthen and consolidate the efficient and rational use of energy in the country, linking to relevant stakeholders on the issue of energy efficiency in the country, and implementing initiatives across sectors of consumer energy, contributing to competitive and sustainable development in El Salvador.
Ownership
Electricity market
In compliance with the new General Law of Electricity enacted in 1996, the vertical integrated state-owned electric utility Comisión Ejecutiva Hidroeléctrica del Rio Lempa (CEL) began divesting control over its distribution and generation assets.
In 2006, there were 11 generation companies in El Salvador, with 18 out of 22 generation plants in private hands and 97% of hydroelectric capacity owned by the public company CEL (Comisión Hidroeléctrica del Río Lempa).
As for transmission, it is in the hands of one government-owned company, Etesal (Empresa Transmisora de El Salvador), while distribution is controlled by five privately-owned companies.
Electricity prices vary considerably from one distribution company to another. Small (high cost) consumers have high prices and larger (lower cost) consumers have lower prices. This is an indication that tariffs in El Salvador may reflect costs better than those in other countries.
Competition
Until the mid 1990s, the power sector in Salvador operated through the government owned Comisión Hidroeléctrica del Río Lempa (CEL), which provided generation, transmission and distribution services
The sector unbundled its different activities both vertically and horizontally. Under the General Law of Electricity 1996, there is no longer a central planning function for new generation plants. Parties wishing to build a power plant must register with the Superintendent of Electricity and Telecommunications, and are subject to open competition from CEL and other private companies.
Geothermal and hydro projects can be built by any party and are granted permission through public bidding.
A new entity, the private company Unidad de Transacciones (UT), replaces the CEL’s former Centre for System Operations. (UT) is in charge of administering the wholesale electricity market, being in charge of system dispatch and performing clearing-house functions. UT is also responsible for the operation of the transmission system.
Retail competition is also in place. Existing distribution companies were split to allow for direct competition along their boundaries.
Energy framework
The Government’s 2007 National Energy Strategy supports the diversification and increase of energy sources. Besides hydroelectricity and geothermal energy, the government foresees the addition of 50 MW of renewable generation in the next 10 years in the form of wind power, solar power, biomass and mini-hydroelectric plants. This would reduce the dependence on traditional thermal sources and the vulnerability to high oil prices that the country started to face in 2005.
In November 2007, El Salvador approved the Fiscal Incentives Law for the Promotion of Renewable Energy. This new legal framework includes incentives such as a 10 year tax exemption for projects below 10 MW of generation capacity.
A new System for the Promotion of Renewable Energy (SIFER) established the creation of a Revolving Fund for the Promotion of Renewable Energy (FOFER) that provides soft loans and guarantees and assists in the financing of feasibility studies for new projects.
El Salvador is also one of the countries included in the SIEPAC project, which is integrating the electricity network of the country with the rest of the Central American region.
Energy studies
The Feasibility Study for the Production of Ethanol and other Biofuels in El Salvador was published in 2009.
Close Energy studiesRole of government
The National Energy Council (CNE) is the highest governing and regulatory authority on Energy Policy It also is the coordinator of the various sectors of the energy sector.
http://www.cne.gob.sv/
The Electrical Energy Directorate (DEE – Dirección de Energía Eléctrica), created in 2001, is the administrative unit within the Ministry of Economy that is in charge of elaborating, proposing, coordinating and executing policies, programs, projects and other actions in the electricity sector.
Rural electrification projects are executed mainly through the Social Investment Fund for Local Development (FISDL), in operation since 1990.
Otherwise, the Ministry of Environment and Natural Resources (MARNA) is the institution in charge of the conservation, protection and sustainable use of the natural resources and the environment.
http://www.marn.gob.sv/
Energy procedure
The program of the new Salvadorian Government led by President Mauricio Funes (2009-2014), has developed an energy planning strategy based on:
- expanding coverage,
- providing subsidies for low-income families,
- diversification,
- strengthening the institutional and legal framework,
- technological innovation and development,
- regional integration and,
- as the strategy’s major focal point, the diversification of the country’s energy matrix to - reduce dependence on thermo-generation, with an emphasis on renewables.
The energy planning procedure in place in El Salvador is the Política Energética Nacional (2010-2024) which integrates the contents and foundations of the national energy policy in El Salvador. The guidelines and objectives of this program fall within the defined concrete actions from the Plan of Government. It also aims to help establish a new configuration of the energy matrix based on sustainable development and proper integration with other key sectors.
Energy regulator
The Superintendent of Electricity and Telecommunications (SIGET) created in 1997.
http://www.siget.gob.sv/
Degree of independence
SIGET is a financially and administratively independent institution with its own patrimony.
The President nominates SIGET’s qualified General Superintendent for a 7-year term who in turn will nominate and be supported by a Manager of Electricity and a Manager of Telecom, each serving 5-year terms, and who must each meet the non-partisan and qualifications criteria established in the law.
Regulatory framework
See the 2007 Fiscal Incentives Law for the Promotion of Renewable Energy and System for the Promotion of Renewable Energy (SIFER).
Close Regulatory frameworkRegulatory roles
SIGET is in charge of proposing implementing regulations and setting standards (for presidential approval). It also regulates and oversees compliance with established norms in the electricity (and telecommunications) sector, fosters competition, and reduces the opportunity for regulatory discretion.
FINET, the National Investment Fund for Electricity and Telecommunications is in charge of promoting social projects and will participate in the definition of subsidies.
The Unidad de Transacciones (UT) administers the market, assuring service quality and fair tariffs and resolving disputes between the new players in the generation, distribution and power marketing businesses.
Energy regulation role
Under the electricity sector law approved in April 2003, the government can control the retail price of electricity.
Close Energy regulation roleRegulatory barriers
Since its inception in 1997, SIGET has been struggling with a heavy work load and limited resources.
Close Regulatory barriersReferences
Business News America. Plan envisions first wind farm in 2016-17. David Casallas. 20 January 2012. Available at: http://www.bnamericas.com/news/electricpower/plan-envisions-first-wind-farm-in-2016-17 [Accessed 18th September 2013]
Renewable Energy World. El Salvador to pour $500 million into Renewables. Ivan Castano. 20 June 2011. Available at: http://www.renewableenergyworld.com/rea/news/article/2011/06/el-salvador-to-pour-500-million-into-renewables [Accessed 18th September 2013]
Gobierno El Salvador. Politica Energetica Nacional. 2007. Available at: http://estadisticas.cne.gob.sv/docs/estudios/Politica_Energetica.pdf [Accessed 18th September 2013]
Encylopedia of Earth, L. D. Clough. Content Source: EIA. Energy Profile of Central America. Available at: http://www.eoearth.org/view/article/152482/ [Accessed 18th September 2013]
Consejo Nacional de Energia. Inicia el programa de eficiencia energética “El Salvador ahorra energía”. Available at: http://www.cne.gob.sv/index.php?option=com_content&view=article&id=232:inicia-el-programa-de-eficiencia-energetica-el-salvador-ahorra-energia-&catid=1:noticias-ciudadano&Itemid=77 [Accessed 18th September 2013]
ECLAC. ISTMO Centroamericano: Estadisticas del subsector eléctrico. October 2007. Available at: http://www.eclac.org/publicaciones/xml/1/30101/L809.pdf [Accessed 18th September 2013]
Consejo Nacional de Energia website. Historia. Available at: http://www.cne.gob.sv/index.php?option=com_content&view=article&id=49&Itemid=84 [Accessed 18th September 2013]
Consejo Nacional de Energia. Política Energética Nacional. Available at: http://www.cne.gob.sv/index.php?option=com_content&view=article&id=153&Itemid=201 [Accessed 18th September 2013]
Superindentencia General de Electricidad y Telecomunicaciones. http://www.siget.gob.sv/ [Accessed 18th September 2013]
Close References