|El Salvador: Electricity sector|
|Electricity coverage(2006)||83.4% (total), 72% (rural), 97% (urban); (LAC total average in 2007: 92%)|
|Installed capacity(2006)||1,312 MW|
|Share of fossil energy||40%|
|Share of renewable energy||60% (hydroelectric & geothermal)|
|GHG emissions from electricity generation (2003)||1.57 MtCO2|
|Average electricity use (2006)||702 kWh per capita|
|Distribution losses (2006)||12.4%|
|Transmission losses (2006)||1.7%|
|Residential consumption (% of total)||33%|
|Industrial consumption (% of total)||n/a|
|Commercial consumption (% of total)||n/a|
|Average residential tariff (US$/kWh, 2006)||0.139; (LAC average in 2005: 0.115)|
|Average industrial tariff (US$/kWh, 2006)||0.103; (LAC average in 2005: 0.107)|
|Average commercial tariff (US$/kWh, 2006)||n/a|
|Annual investment in electricity||n/a|
|Share of private sector generation||65%|
|Competitive supply to large users||Yes|
|Competitive supply to residential users||No|
|Number of service providers||11 (generation), 1 (transmission), 5 (distribution)|
|National electricity regulator||Yes (SIGET)|
|Responsibility for policy setting||Ministry of Economy|
|Responsibility for renewable energy||Ministry of Economy|
|Responsibility for the environment||Ministry of Environment and Natural Resources (MARNA)|
|Electricity Sector Law||Yes (1996)|
|Renewable Energy Law||Yes (2007)|
|CDM transactions related to the electricity sector||3 registered CDM project; 385,533 t CO2e annual emissions reductions|
El Salvador is the largest producer of geothermal energy in Central America. Except for hydroelectric generation, which is almost totally owned and operated by the public company CEL (Comisión Hidroeléctrica del Río Lempa), the rest of the generation capacity is in private hands. With demand expected to grow at a rate of 5% in the coming years, the Government's 2007 National Energy Strategy identified several hydroelectric and geothermal projects as the best option to meet demand in the future and to diversify the country's energy mix.
This would also reduce the dependence on traditional thermal sources and, with that, the vulnerability to high oil prices that the country started to face in 2005. El Salvador is also one of the countries included in the SIEPAC project, which will integrate the electricity network of the country with the rest of the Central American region.
El Salvador is the country with the highest geothermal energy production in Central America. Total installed capacity in 2006 was 1,312 MW, of which 52% was thermal, 36% hydroelectric and 12% geothermal. The largest share of generation capacity (65%) was in private hands. In terms of evolution, installed capacity has almost doubled in the last 20 years and increased by 200 MW since the year 2000.
Gross electricity generation in 2006 was 5,195 GWh, of which 40% came from traditional thermal sources, 38% from hydroelectricity, 20% from geothermal sources, and 2% from biomass.
In 2006, total electricity sold in El Salvador was 4,794 GWh, which corresponds to 702kWh annual per capita consumption. The residential sector accounted for 33% of the consumption, with the unregulated market making up for 11% of the electricity consumed.
Maximum demand in the wholesale electricity market was 881 MW, 6.3% higher than the figure for 2005.
Increase in maximum demand since the year 2000 has been matched by similar increases in installed capacity. Average annual increase in maximum demand has been 2.6%, while average increase in installed capacity has been 2.9%, with increase percentages above 6% for both measures for the year 2006.The nominal reserve margin for the system in 2004 was 36%. Although high, this number does not capture the vulnerability of the generation system to particular unit outages, especially those related to hydroelectric capacity and availability.
As for the future, demand is expected to grow at an annual rate of 5% in the coming years.Peak demand is expected to grow from 833 MW in 2005 to 1,030 MW in 2010. Planning simulations indicate that the risk of power rationing is unlikely to occur until 2010 even if there is a delay in the commissioning of the SIEPAC interconnection. The 2007 National Energy Strategy identifies the geothermal and hydroelectric projects more likely to be executed in order to close the gap between demand and supply in the future and to meet the objective of diversifying the country's energy mix.
In 1995, only 65.5% of the population in El Salvador had access to electricity. Currently, the electrification index is 83.4%. This coverage is higher than that in Guatemala (83.1%), Honduras (71.2%) and Nicaragua (55%) but lower than the one for Costa Rica (98.3%) and Panamá (87.1%)and also below the 94.6 average for LAC. Electrification in most major urban centers is estimated to be above 97%, whereas rural coverage is around 72%. The Ministry of Economy's plans seek to reach a 93% rural electrification index by 2009. This ambitious plan includes the expansion of the distribution network as well as the installation of photovoltaic solar panels in areas that are isolated from the network.
In 2005, the average number of interruptions per subscriber was 12, while duration of interruptions per subscriber was 16 hours. This is very close to the weighted averages for LAC, which are 13 interruptions and 14 hours respectively.
In 2006, distribution losses in El Salvador were 12.4%, only higher than those of Costa Rica (9.4%) and below the regional Central American average of 16.2%.On the other hand, transmission losses were as low as 1.7% for the same year.
The regulatory entities for the electricity sector in El Salvador are:
In 2006, the President created the National Energy Council (CNE), which has the role of analyzing El Salvador's energy situation as well as the Government proposals, recommending the inclusion of new actions and strategies. The CNE seeks to contribute to a shift in generation towards renewable energy and to modify consumption patterns toward the efficient use of energy.
The Transactions Unit (UT) is the private company 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.
In 2006, there were 11 generation companies in El Salvador. Of the 22 generating plants, 18 were in private hands. The only public company with a stake in generation is CEL (Comisión Hidroeléctrica del Río Lempa), which owns 97% of the hydroelectric capacity. The number and type of plants operated by each company is as follows:
|Type||Company name||No. of plants||Installed capacity (MW)|
Source: CEPAL 2007
In El Salvador, one government-owned company, Etesal (Empresa Transmisora de El Salvador), which was constituted in 1999 after the restructuring of CEL (Comisión Ejecutiva Hidroeléctrica del Río Lempa),is responsible for the maintenance and expansion of the transmission system.
In El Salvador, there are five distribution companies. The market share for each of them in 2006 was:
CAESS, CLESA, EEO (Empresa Eléctrica de Oriente) and Deusem (Distribuidora Eléctrica de Oriente) are controlled by AES Corporation.
The 2007 National Energy Policy supports the diversification and increase of energy sources, mainly through renewable energy such as hydroelectricity, geothermal, solar, wind power and biofuels (as well as mineral coal and natural gas). 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.
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) contemplates the creation of a Revolving Fund for the Promotion of Renewable Energy (FOFER) that would provide soft loans and guarantees and assist in the financing of feasibility studies for new projects.
Currently, hydroelectric plants account only for 36% of the electricity produced in El Salvador. The public company CEL (Comisión Hidroeléctrica del Río Lempa) owns and operates 97% of the capacity.The four hydroelectric plants in El Salvador are: 5 de Noviembre (81.4 MW), Guajoyo (15MW), Cerrón Grande (135 MW), and 15 de Septiembre (156.3 MW), all of them on the Lempa River.
In this sector, the projects currently underway are:
This expansion of the hydroelectric capacity would add 351 MW to the system in the next 5 years, a 76% increase in current capacity. In addition, if the bi-national projects El Tigre (in the Lempa River) and El Jobo and Piedra de Toro (in the Paz River) with Honduras and Guatemala were carried out, 488 MW of additional capacity would be added to the generation system.
El Salvador's wind potential is currently being studied by Comisión Hidroeléctrica del Río Lempa (CEL) and the Finnish Meteorological Institute (FMI).
A solar map of the country is also under development.
Currently, there are two geothermal facilities in operation 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 is currently expanding the two existing geothermal plants, as well as conducting a feasibility study for a third plant, Cuyanausul. It is expected that the three projects add 64 MW of installed electric generation capacity by 2007.
The 2007 National Energy Strategy determines that potential geothermal capacity in El Salvador is about 450 MW. Expansion plans could result in 183 MW additional capacity in the period 2006-2014 (a 121% increase in the next 7 years), with projects to be developed in Ahuachapán (25 MW), Berlín (50 MW), San Vicente (54 MW) and Chinameca (54 MW).
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 electricity sector restructuring that led to the unbundling of electricity generation, transmission and distribution and the horizontal division of generation and distribution into several companies was carried out in the period 1996-2000. The Electricity Law (Legislative decree No.843) and its secondary legislation were enacted in 1996 and 1997 respectively through initiatives led by the Electrical Energy Directorate (DEE) within the Ministry of Economy (MINEC).The General Superintendence for Electricity and Telecommunications (SIGET) was created as part of the reform and assigned the responsibility of applying the sector laws and monitoring compliance with them.
The electricity Law in El Salvador affords a high degree of liberty to market agents. Article 8 explicitly authorizes vertical integration in generation, transmission, distribution and supply. The only limitation consists of prohibiting generation, distribution and supply companies from owning shares in Etesal (Empresa Transmisora de El Salvador, S.A. de C.V.), the transmission company that resulted from the restructuring of CEL. Such an allowance, together with the organization of a price-based spot market, is surprising in a small system with few operators. [ citation needed ]
The remuneration of generators in the spot market did not generate interest from private producers to obtain high returns and therefore install new capacity. As a result, the Government was concerned with the possibility that a lack of new generation capacity could lead both to higher spot prices and higher tariffs, lower reserve margins and eventually lead to a supply crisis in which it could be forced to invest in the sector. In order to address this problem, in 2003 and 2004, the Government instituted rules for allowing competitively bid long-term contract prices to be reflected in consumer tariffs and empowered the regulator to shift to a cost-based market if evidence of market manipulation emerged.
In July 2005, as a result of the high international oil prices, the government created the National Emergency Committee to Address High Oil Prices in an attempt to analyze and promote measures to minimize impacts. This Committee promoted certain specific actions such as the spreading out working schedules to reduce vehicle traffic. Less than one year after the creation of the Committee, the necessity to broaden its scope of action was acknowledged, which led to the creation, in July 2006, of the National Energy Council (CNE). The CNE will propose, manage and contribute to the agencies in charge of approving energy strategies that participate in the country's socio-economic development in harmony with the environment.
In May 2007, the Salvadoran government produced its National Energy Policy, whose main objectives are: (i) ensuring proper, continuous, quality and reasonably priced energy supply; (ii) reduce vulnerability in energy provision through diversification of the country's energy sources; (iii) minimize environmental impacts; and (iv) increase energy services coverage to the population and to the economic sectors. The specific objectives and strategic lines of the National Energy Policy include: (i) diversification and increase of energy sources; (ii) expansion of coverage; (iii) promotion of market efficiency and establishment of clear and stable rules; (iii) promotion of energy efficiency; and (iv) support for energy integration.
Since November 2007 the Salvadoran government has been evaluating a Natural Gas law, since Natural Gas is not included nor regulated under the current Hydrocarbons Law.This move has been propitiated because of a new large-scale natural gas project being developed by Cutuco Energy Central America. This project will use Natural Gas to generate 525 MW, more than half of what is currently generated in El Salvador.
In 1995, after almost a decade of preliminary studies, the Central American governments, the government of Spain and the Inter-American Development Bank agreed to the execution of the SIEPAC project. This project, together with the Plan Puebla Panama aims at the electric integration of the region. Feasibility studies showed that the creation of a regional transmission system would be very positive for the region and lead to a reduction in electricity costs and to improvements in the continuity and reliability of supply. In 1996, the six countries (Panama, Honduras, Guatemala, Costa Rica, Nicaragua and El Salvador) signed the Framework Treaty for the Electricity Market in Central America.
The design of the Regional Electricity Market (MER) was done in 1997 and approved in 2000. MER is an additional market superimposed on the existing six national markets, with a regional regulation, in which the agents authorized by the Regional Operational Body (EOR) carry out international electricity transactions in the region. As for the infrastructure, EPR (Empresa Propietaria de la Red S.A.) is in charge of the design, engineering, and construction of about 1,800 km of 230kV transmission lines. The project is expected to be operational by the end of 2008.
(For a map of the regional transmission line, see SIEPAC)
Electricity prices are regulated by SIGET. They comprise generation, transmission, distribution, and supply components.In 2005, the average residential tariff in El Salvador was US$0.139 per kWh, which is above the US$0.105 per kWh weighted average for LAC. In contrast, the average industrial tariff for El Salvador, US$0.103 per kWh was below the US$0.107 per kWh average for LAC.
Electricity prices vary considerably from one distribution company to another. Small (high cost) consumers have high prices and larger (lower cost) consumers have lower prices. This is an indication that tariffs in El Salvador reflect costs better than those in other countries.
For residential users with consumption levels below 100 kWh, 86% of the difference between the full tariff and the maximum prices established in November 1999 is subsidized. Those maximum prices are:
In 2006, according to the available data, 809,536 users (i.e. 60.6% of the clients connected the distribution network) were subsidized. Together, these consumers accounted for 10.6% of the total energy demand at the distribution level.
Expansion plan requirements include, in addition to generation additions, transmission investments (including 230kV lines that link with the SIEPAC interconnection) and distribution investments, including rural electrification. Investment requirements for the period 2005-2009 were estimated as follows:
|($US million)||Total||Public||Private||Public/ Private|
Source: World Bank 2006
Public/private partnerships constitute the major source of financing for generation. They include investments in geothermal facilities through La Geo and its strategic investor, which are likely to go ahead; other investments in this category include the Chaparral power plant ($143 million). It is also important to note that these estimates are just for investments required within El Salvador. They do not take into account financing required for the 300 MW of firm generation capacity assumed to be available from regional sources through the SIEPAC line.
The budgeted investment in rural electrification during 2004-2009 amounts to around US$100 million, financed as summarized in the following table:
|($US million)||Government||Municipalities||Distribution companies||Total|
Source: World Bank 2006
Rural electrification projects are executed mainly through the Social Investment Fund for Local Development (FISDL), in operation since 1990. The FISDL has executed a large number of projects totaling over US$400 million, although it has faced obstacles to achieve its goals, mainly due to a lack of secure financing.
One of the most ambitious projects for rural electrification will be carried out during the next 5 years in the North of the country through a co-investment project of the Government with the Millennium Challenge Account (MCA) in 94 municipalities. The goal of the project is to increase service coverage from the current 78% to 97% in 2012. Total investment required has been estimated at US$40 million.This project will be implemented through the Electricity and Telephone National Investment Fund (FINET). According to the FINET Creating Law, resources for the construction and improvement of electrical infrastructure will be granted through the auctioning of subsidies. For the allocation of funds to implement this rural electrification sub-activity, electricity distribution companies, authorized by the Electricity and Telecommunications Superintendence (SIGET) will be able to participate.
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 electricity sector restructuring that led to the unbundling of electricity generation, transmission and distribution and the horizontal division of generation and distribution into several companies was carried out in the period 1996-2000.
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.
|Activity||Private participation (%)|
|Generation||65% of installed capacity|
The Ministry of Environment and Natural Resources (MARN) is the institution in charge of the conservation, protection and sustainable use of the natural resources and the environment.
OLADE (Latin American Energy Association) estimated that CO2 emissions from electricity production in 2003 were 1.57 million tons of CO2, which corresponds to 25% of total emissions from the energy sector.
Currently (November 2007), there are three registered CDM projects in the electricity sector in El Salvador, with overall estimated emission reductions of 385,553 tCO2e per year. One of the projects is a landfill gas project, another one a bagasse cogeneration project and the third one a geothermal plant project.
The Inter-American Development Bank (IDB) is currently providing technical assistance to El Salvador in several electricity-related initiatives:
India is the world's third largest producer and third largest consumer of electricity. The national electric grid in India has an installed capacity of 374.2 GW as of 31 December 2020. Renewable power plants, which also include large hydroelectric plants, constitute 36.17% of India's total installed capacity. During the 2018-19 fiscal year, the gross electricity generated by utilities in India was 1,372 TWh and the total electricity generation in the country was 1,547 TWh. The gross electricity consumption in 2018-19 was 1,181 kWh per capita. In 2015-16, electric energy consumption in agriculture was recorded as being the highest (17.89%) worldwide. The per capita electricity consumption is low compared to most other countries despite India having a low electricity tariff.
Iberdrola is a Spanish multinational electric utility company based in Bilbao, Spain. Iberdrola has a workforce of around 34,000 employees in dozens of countries on four continents serving around 31.67 million customers. Subsidiaries include Scottish Power and a significant part of Avangrid, amongst others. The largest shareholder of the company was, in 2013, Qatar Investment Holding; other significant shareholders are Norges Bank, Kutxabank and Bankia.
SIEPAC is an interconnection of the power grids of six Central American nations. The project was discussed since 1987. The constructed new transmission lines connect 37 million consumers in Panama, Costa Rica, Honduras, Nicaragua, El Salvador, and Guatemala. It was expected to be completed in April 2013, and was completed in 2014. There is controversy about the benefits and indirect environmental impacts of the project.
The electricity sector in Honduras has been shaped by the dominance of a vertically integrated utility ; an incomplete attempt in the early 1990s to reform the sector; the increasing share of thermal generation over the past two decades; the poor financial health of the state utility Empresa Nacional de Energía Eléctrica (ENEE); the high technical and commercial losses in transmission and distribution; and the low electric coverage in rural areas.
In Honduras, there is an important potential of untapped indigenous renewable energy resources. Due to the variability of high oil prices and declining renewable infrastructure costs, such resources could be developed at competitive prices.
The electricity sector in Bolivia is dominated by the state-owned ENDE Corporation, although the private Bolivian Power Company is also a major producer of electricity. ENDE had been unbundled into generation, transmission and distribution and privatized in the 1990s, but most of the sector was re-nationalized in 2010 (generation) and 2012.
The electricity sector in Argentina constitutes the third largest power market in Latin America. It relies mostly on thermal generation and hydropower generation (36%). The country still has a large untapped hydroelectric potential. The prevailing natural gas-fired thermal generation is at risk due to the uncertainty about future gas supply.
As of August 2020 Chile had diverse sources of electric power: for the National Electric System, providing over 99% of the county's electric power, hydropower represented around 26.7% of its installed capacity, biomass 1.8%, wind power 8.8%, solar 12.1%, geothermal 0.2%, natural gas 18.9%, coal 20.3%, and petroleum-based capacity 11.3%. Prior to that time, faced with natural gas shortages, Chile began in 2007 to build its first liquefied natural gas terminal and re-gasification plant at Quintero near the capital city of Santiago to secure supply for its existing and upcoming gas-fired thermal plants. In addition, it had engaged in the construction of several new hydropower and coal-fired thermal plants. But by July 2020 91% of the new capacity under construction was of renewable power, 46.8% of the total solar and 25.6% wind, with most of the remainder hydro.
As required by the Constitution, the electricity sector is federally owned, with the Federal Electricity Commission essentially controlling the whole sector; private participation and foreign companies are allowed to operate in the country only through specific service contracts. Attempts to reform the sector have traditionally faced strong political and social resistance in Mexico, where subsidies for residential consumers absorb substantial fiscal resources.
The electricity sector in Peru has experienced impressive improvements in the past 15 years. Access to electricity has increased from 45% in 1990 to 96.4% in 2018, while service quality and efficiency of service provision improved. These improvements were made possible through privatizations following reforms initiated in 1992. At the same time, electricity tariffs have remained in line with the average for Latin America.
Nicaragua is the country in Central America with the lowest electricity generation, as well as the lowest percentage of population with access to electricity. The unbundling and privatization process of the 1990s did not achieve the expected objectives, resulting in very little generation capacity added to the system. This, together with its high dependence on oil for electricity generation, led to an energy crisis in 2006 from which the country has not fully recovered yet.
The largely government owned electricity sector in Haiti referred to as Électricité d'Haïti (ED'H for "Haiti Electric Utility", faced a deep crisis characterized by dramatic shortages and the lowest coverage of electricity in the Western Hemisphere in 2006. with only about 38.5% of the population having regular access to electricity. In addition, Haiti's large share of thermal generation makes the country especially vulnerable to rising and unstable oil prices.
The power sector in the Dominican Republic has traditionally been, and still is, a bottleneck to the country's economic growth. A prolonged electricity crisis and ineffective remedial measures have led to a vicious cycle of regular blackouts, high operating costs of the distribution companies, large losses including electricity theft through illegal connections, high retail tariffs to cover these inefficiencies, low bill collection rates, a significant fiscal burden for the government through direct and indirect subsidies, and very high costs for consumers as many of them have to rely on expensive alternative self-generated electricity. According to the World Bank, the revitalization of the Dominican economy depends greatly on a sound reform of the sector.
The electricity sector in Brazil is the largest in South America. Its capacity at the end of 2016 was 150,338 MW, a 9.500 MW increase on 2015. The installed capacity grew from 11,000 MW in 1970 with an average yearly growth of 5.8% per year. Brazil has the largest capacity for water storage in the world, being highly dependent on hydroelectricity generation capacity, which meets over 70% of its electricity demand. The national grid is composed 80% from renewable sources. This dependence on hydropower makes Brazil vulnerable to power supply shortages in drought years, as was demonstrated by the 2001-2002 energy crisis.
Paraguay is one of the few countries in Latin America that has maintained an integrated public monopoly on electricity. Hydropower comprises nearly 100 percent of electricity in Paraguay; 90 percent of generated energy is exported, with neighboring Argentina and Brazil receiving the majority. Paraguay is one of the world's largest electricity net exporters.
The Cerrón Grande Hydroelectric Dam spans the Lempa River 78 km north of San Salvador in the municipalities of Potonico, (Chalatenango) and Jutiapa (Cabañas) in El Salvador.
Cimarron Hydroelectric Power Project a hydroelectric power plant in El Salvador, that was to start construction in 2010. The plant would have been be located in the upper basin of the Lempa River, upstream of the Cerrón Grande Hydroelectric Dam. The proposed location of the dam was between the towns of Agua Caliente, Chalatenango on the left shore and Metapán, Santa Ana, on the right shore. A tunnel would divert water from the Lempa River to a powerhouse and substation to be built near Agua Caliente. With an estimated capacity of 261 megawatts, the project would have increased El Salvador's total generation capacity by almost 25%.
Water resources management in El Salvador is characterized by difficulties in addressing severe water pollution throughout much of the country's surface waters due to untreated discharges of agricultural, domestic and industrial run off. The river that drains the capital city of San Salvador is considered to be polluted beyond the capability of most treatment procedures.
Renewable energy in Costa Rica supplied about 98.1% of the electrical energy output for the entire nation in 2016. Fossil fuel energy consumption in Costa Rica was 49.48 as of 2014, with demand for oil increasing in recent years. In 2014, 99% of its electrical energy was derived from renewable energy sources, about 80% of which from hydroelectric power. For the first 75 days of 2015, 100% of its electrical energy was derived from renewable energy sources and in mid 2016 that feat was accomplished for 110 consecutive days despite suboptimal weather conditions. As a country, Costa Rica has a geographic advantage over others in that its high concentration per capita of rivers, dams, and volcanoes allows for a high renewable energy output. In addition, Costa Rica is the fourth highest nation in terms of rainfall per capita: it receives an average of 2,926 mm of precipitation per year. As a smaller nation with a population of only 5 million and no major industry, the need for strong energy infrastructure is less than for larger countries of higher population density. The 1948 elimination of the military of Costa Rica freed up millions of dollars from the government defense budget which are now invested in social programs and renewable energy generation. As president of Costa Rica in 1948, José Figueres announced that the nation's former military budget would be refocused specifically in healthcare, education, and environmental protection.
The electricity sector of Armenia includes several companies engaged in electricity generation and distribution. Generation is carried out by multiple companies both state-owned and private.