WASHINGTON, D.C., March 28, 2025 - The World Bank's Board of Executive Directors today approved a project to help El Salvador increase renewable electricity generation capacity and harness geothermal heat for direct use. The project provides for improvements in several areas, including geothermal resource exploration and evaluation, the construction of a power generation plant, and social and environmental programs.
The US$150 million, six-year "El Salvador Geothermal Energy for Sustainable and Inclusive Development Project" aims to use underground heat to generate sustainable and affordable electricity. In addition, local communities will be able to harness and use heat generated by geothermal energy for various activities, including drying and processing food, thereby paving the way for the development of local agribusiness.
According to Daniel Alejandro Alvarez, President of the Lempa River Executive Hydroelectric Commission (CEL), "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 State-owned company responsible for generating electricity using El Salvador's geothermal resources, is the implementing agency, and will move forward with the construction of a 25 MW geothermal power plant in the Chinameca Geothermal Field, which will be connected to the national power transmission grid. Exploratory geothermal work will also be conducted in this field to facilitate the development of up to 40 MW of renewable energy capacity for power generation.
During the construction and operation phases, the geothermal plant will create jobs for people living in the communities around the Chinameca Geothermal Field, located 115 km east of San Salvador. The energy produced will be more accessible and cleaner, improving energy stability in the country and attracting investments that will drive its economic and technological development.
"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," noted Carine Clert, World Bank Country Manager for El Salvador and Costa Rica.
The project will also increase the CEL's operational capacity to better manage energy demand and respond more effectively to any supply disruptions, so as to ensure that homes, hospitals, schools, and businesses will have a constant and reliable electricity supply.
The loan, which is financed by the International Bank for Reconstruction and Development (IBRD), is a variable rate loan with a 30-year maturity and a six-year grace period.
Subscribe to our monthly newsletter
