The World Bank's Board of Executive Directors has given the green light to a project aimed at increasing El Salvador's renewable electricity generation capacity through the use of geothermal energy. This initiative, titled the "El Salvador Geothermal Energy for Sustainable and Inclusive Development Project," is backed by a US$150 million investment spread over six years.
The project seeks to leverage underground geothermal heat to produce sustainable electricity and foster local agribusiness by utilizing geothermal energy for food processing and drying, among other uses.
Daniel Alejandro Alvarez, President of the Lempa River Executive Hydroelectric Commission (CEL), emphasized the government's commitment: "The government is committed to ensuring that all Salvadorans have access to clean and affordable energy. This World Bank-financed project is an important step in strengthening our energy system and promoting sustainable and inclusive development."
LaGeo, a government-owned entity, is set to implement the project by constructing a 25 MW geothermal power plant in the Chinameca Geothermal Field. This facility will be integrated into the national power grid. Additionally, exploratory geothermal activities will be conducted to support the development of up to 40 MW of new renewable energy capacity.
This project will generate employment opportunities for communities surrounding the Chinameca Geothermal Field, located 115 km east of San Salvador, during both the construction and operational phases. The anticipated energy production is expected to enhance national energy stability, making it more accessible and environmentally friendly, which could attract further investments.
Carine Clert, World Bank Country Manager for El Salvador and Costa Rica, highlighted the cooperative efforts: "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."
Additionally, the project aims to increase CEL's capacity to manage energy demand and ensure a steady supply of electricity to homes, hospitals, schools, and businesses across El Salvador.
The loan supporting this project is financed by the International Bank for Reconstruction and Development (IBRD) and is structured as a variable rate loan with a 30-year term and a six-year grace period.