El Salvador: Electricity sector DataElectricity coverage(2006) 83.4% (total), 72% (rural), 97% (urban); (LAC total average in 2007: 92%)Installed capacity(2006) 1,312 MWShare 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 capitaDistribution losses (2006) 12.4%Transmission losses (2006) 1.7%Residential consumption (% of total) 33%Industrial consumption (% of total) n/aCommercial consumption (% of total) n/aAverage 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/aAnnual investment in electricity n/aInstitutionsSector unbundling YesShare of private sector generation 65%Competitive supply to large users YesCompetitive 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 EconomyResponsibility for renewable energy Ministry of EconomyResponsibility 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's energy sector is largely focused on renewables. 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.
Electricity supply and demand
Installed capacity
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.CEPAL 2007
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.Gobierno de El Salvador 2007
Demand
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.CEPAL 2007
Maximum demand in the wholesale electricity market was 881 MW, 6.3% higher than the figure for 2005.SIGET 2007
Demand versus supply
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.CEPAL 2007 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.World Bank 2006
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.World Bank 2006 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.
Access to electricity
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%) CEPAL 2007 and also below the 94.6 average for LAC.Benchmarking data of the electricity distribution sector in Latin America and Caribbean Region 1995-2005 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.World Bank 2006 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.
Service quality
Interruption frequency and duration
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.
Distribution and transmission losses
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%.CEPAL 2007 On the other hand, transmission losses were as low as 1.7% for the same year.SIGET 2007
Responsibilities in the electricity sector
Policy and regulation
The regulatory entities for the electricity sector in El Salvador are:
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. The General Superintendence of Electricity and Telecommunications (SIGET) is the regulatory body for both the electricity and telecommunications sector. SIGET is in charge of regulating the power market, the distribution companies and consumer prices.World Bank 2006
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.World Bank 2006 UT is also responsible for the operation of the transmission system.
In 2025 the National Assebmbly published the new Ley General de Electricidad transforming the sector into a regulated market. Energy producers must seek aproval from Direccion General de Energia y Minas before celebrating contracts with distributors such as AES CLESA or DEL SUR. This new authority gives the ministry power over pricing regardless of what generators and distributors are willing to agree.
The Ministry now holds authority over SIGET and UT, it is noteworthy that all these institutions and CEL (public power generation) are directed by Daniel Alvarez. The Ministry plans to instruct what prices buyers and sellers can transact at, a shift from previous authorities where private parties could agree on the termns of generation.
Generation
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:CEPAL 2007
Type Company name No. of plants Installed capacity (MW) WHOLESALE MARKET 13 1,157.3 Public companies 4 460.3 Hydroelectric 4 460.3 CEL 4 460.3 Private companies 9 697 Geothermal 2 151.2 LaGeo 2 151.2 Thermal 7 545.8 CESSA 1 32.6 CLESA 1 0 Duke 3 318 Invers.Ene 1 51.2 Nejapa 1 144 RETAIL MARKET 9 155.5 Private companies 9 155.5 Hydroelectric 3 12.3 CECSA 1 8 De Matheu 1 1.5 Sensunapán 1 2.8 Thermal 6 143.2 Borealis 1 13.6 CASSA 1 29 EGI Holdco 1 5.5 Ing. Cabaña 1 21 Ing. Ángel 1 30 Textufil 1 44.1 TOTAL 22 1,312.8 Source: CEPAL 2007
Transmission
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.SIGET 2007
Distribution
In El Salvador, there are five distribution companies. The market share for each of them in 2006 was:CEPAL 2007
CAESS: 44% Delsur: 25% AES-CLESA: 18% EEO: 10% Deusem: 2%
CAESS, CLESA, EEO (Empresa Eléctrica de Oriente) and Deusem (Distribuidora Eléctrica de Oriente) are controlled by AES Corporation.
Renewable energy resources
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.
Hydroelectricity
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.CEPAL 2007 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.SIGET 2007
In this sector, the projects currently underway are:
Upgrading of the two units in the 15 de Septiembre plant with 24 MW of new capacity New hydroelectric plant, the 66 MW El Chaparral New hydroelectric plant, the 261 MW Cimarron Hydroelectric Power Plant
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.
Wind
El Salvador's wind potential is currently being studied by Comisión Hidroeléctrica del Río Lempa (CEL) and the Finnish Meteorological Institute (FMI).
Solar
A solar map of the country is also under development.
Geothermal