IRENA Offers Recommendations to Accelerate El Salvador’s Energy Transition

IRENA analysis presents 14 concrete actions that can significantly accelerate the country’s uptake of renewable energy

Enhancing long-term planning for the renewable energy sector, fostering project development and establishing clear institutional frameworks are among the key action areas that can significantly accelerate the deployment of renewable energy in El Salvador, according to recently published recommendations by the International Renewable Energy Agency (IRENA). Renewables Readiness Assessment: El Salvador identifies challenges for renewable energy deployment in the country and outlines key recommendations to overcome existing barriers.

IRENA’s recommendations for El Salvador were launched at a high-level, virtual event attended by IRENA Director-General Francesco La Camera, Mr. Daniel Alvarez, President of the Executive Hydroelectric Commission of the Lempa River and H.E. Maria Luisa Hayem, El Salvador’s Minister of Economy.

El Salvador has added no fossil fuel power generation since 2013, and made significant progress in the diversification of its domestic energy mix. Since 2015, solar PV capacity alone has grown nearly tenfold, reaching 273 megawatts (MW) in 2019.

“El Salvador might be the smallest country in Central America, but its renewable energy potential is vast,” said IRENA Director-General Francesco La Camera. “By unlocking the country’s indigenous renewable energy potential, El Salvador can boost health capacity, build climate resilience and substantially boost its post-COVID recovery. We believe that the recommendations of this report can help guide the way,” he added.

Mr. Daniel Alvarez, President of the Executive Hydroelectric Commission of the Lempa River, added: “With the arrival of President Nayib Bukele, El Salvador has taken irrefutable steps, ordering the national electricity sector and seeking to diversify the energy matrix, promoting renewable energy resources such as hydroelectric, geothermal, solar photovoltaic and wind.”

“The development of renewable energy will allow the country to reduce the use of energy sources coming from fossil fuels and rely less on energy imports. The RRA provided by IRENA will provide input and serve as a guide for the continued advancement of renewable energy development in our country,” he said.

The analysis, which was developed through a broad-based national stakeholder consultation process, shows that competitive tendering processes and various fiscal incentives for renewable electricity have helped to create favourable business conditions for renewable power generation in the country. However, El Salvador’s diverse renewable resource potential remains largely untapped. According to El Salvador’s masterplan for renewable energy development, the country can add up to 682 MW of renewable energy capacity by 2026.

The assessment notes that a lack of coordination and long-term energy planning is one of the main barriers to further progress, recommending the development of a more comprehensive national energy plan that encompasses all energy technologies as well as suppliers and consumers. The long-term plan should include an integrated analysis of current market conditions and establish pathways for the integration of distributed renewable technologies into buildings.

The analysis, developed through a nationally owned process, notes El Salvador’s implementation of a net metering scheme in 2017 is a strong example of the type of regulatory measures that can further promote solar PV generation in El Salvador. Assessing the implementation of distributed power generation can help inform existing regulatory frameworks and empower end users for relatively flexible energy management, according to the report.

Geothermal energy is a vastly underutilised national resource, per the report, as current regulatory frameworks only cover the use of geothermal for power generation. IRENA’s analysis shows that vast potential exists to scale up geothermal energy for direct-use applications such as greenhouse heating, food drying and fish farming. Recommendations include a review of the geothermal sector’s regulatory framework and a need to build capacity and awareness at the national level.

The report also promotes key actions that can foster project development and financing for renewables in El Salvador, including centralising administrative procedures and permits, assessing and expanding financing instruments, and familiarising local private institutions with the renewable energy market.

Renewables Readiness Assessment: El Salvador lists 14 concrete recommendations around the following five action areas:

1. Enhance long-term planning and policy for the renewable energy sector
2. Create enabling conditions for geothermal energy development
3. Establish clear institutional frameworks and co-ordination
4. Assess the implementation of distributed power generation
5. Foster project development and financing for renewables