IEEJ: August 2012 All Right Reserved

IEEJ : June 2012

Training and Dialogue Program
Energy Policy
CONSEJO NACIONAL DE ENERGÍA

Country Report of El Salvador
Juan José García
National Council of Energy

Japan, Tokyo. June 2012

IEEJ: August 2012 All Right Reserved

Agenda

1. General information of El Salvador
2. The energy sector of El Salvador
3. Statistics of energy demand and supply
4. challenges in the formulation of the Energy
PolicyIEEJ: August 2012 All Right Reserved

GENERAL INFORMATION OF EL SALVADORIEEJ: August 2012 All Right Reserved

General information of El Salvador• Location: Central America, bordering the North Pacific
Ocean between Guatemala and Honduras• Territorial extension: 20,742 km2• Population: 6.1 million; population density of 294 p/km2• Climate: Tropical with two seasons; rainy season (from Mayto October) and dry season (from Nov. to April).
• Political Division: 14 departments (Capital: San Salvador)and 262 municipalities.
• Demographic data:–52.7% women and 47.3% men–

62.5% urban area and 37.5% rural area–

Age: 58.5% are under 30 years, the 31.1% arebetween 31 y 59 years, y el 10.40% are over 60 years.

• Economy: dollarized since 2001. The economic model is theresult of following the Washington Consensus and is currently
focused on the promotion of exports of domestic products–average monthly income per household is US$479.15.

–

Gross Domestic Product (GDP) per capita is US$7,500–

family remittances, they represent 16% of GDP andthey come mainly from United States of America

IEEJ: August 2012 All Right Reserved

General information of El Salvador

Socioeconomic challenges•Persistence of high levels of poverty and social deficits•Insecurity: high homicide rates, crime and organized crime•Low economic growth•High rates of labor underutilization•Weak fiscal situation•Low levels of savings and investment•Growing trade deficit and modest ability to attract foreign
direct investment (FDI)IEEJ: August 2012 All Right Reserved

THE ENERGY SECTOR OF EL SALVADORIEEJ: August 2012 All Right Reserved

The Energy Sector of El Salvador
Energy Sector in El Salvador – Institutional Framework
Board of Directors CNE

MINEC

STPMH

MARN

MOP

CNE

DCCCSociety .
Academy , etc.

Policies, strategies and coordination

FINET

SIGETSC

DRHMsupervision

supervision

Regulation
Supervisio
n andcontrol

Implementation

ELECTRICITY
MARKETFUELS MARKET

DEMAND

DEMANDIEEJ: August 2012 All Right Reserved

The Energy Sector of El SalvadorElectricity: This sector was restructured in 1996; and, as a consequence,
new market entities were created and the activities ofgeneration, transmission, distribution and commercialization
were separated. The new entities created in this sector are:
 SIGET (Superintendence of Electricity andTelecommunications) FINET (National Investment Fund in Electricity andTelephony)
 UT (Transactions Unit) ETESAL (Transmission Company of El Salvador
 Generation: There are eigthteen (18) generators, the biggest
ones are: CEL (472 MW), LaGeo (204 MW), Duke Energy (338MW), Nejapa Power (144 MW), INE (100 MW), And also exist
small generators that provide electricity to the national grid.
 Distribution: in El Salvador there are eight (8) distributors

IEEJ: August 2012 All Right Reserved

The Energy Sector of El Salvador
Fuels:
 The Ministry of Economy is in charge of regulating thesector in the following areas: Imports
 Transportation
 Distribution
 Trade Supervision and control
 Calculate the reference price for gasoline anddiesel and the import parity price for LPG.
 In the fuel market, there are 4 competitors
 In the LPG market, there are 6 competitors
 The hydrocarbons sector is characterized by a freemarket scheme, with the exception of LPG that has afixed price for being subject to a focused state subsidy
for residential consumptionIEEJ: August 2012 All Right Reserved

The Energy Sector of El Salvador
Energy Chain
Primary

Secondary

Imp.
Petroleum
ProductsImp.
Crude Oil

FinalImp
Imp
Electricity
Electricity

ExportExportEthanol
Ethanol

Tx.
Tx.
Export.
Export.
Thermic
Thermic
Generation
Generation

Oil
RefinerySugarcane
Sugarcane
products
products

Tx.
Tx. MRSMRS
HydroHydro
Generation
Generation

Geothermal
Geothermal
Generation
Generation

Coal
Coal Plant
Plant
Sugar
Sugar mills
mills
Generation
Generation

DemandIEEJ: August 2012 All Right Reserved

The Energy Sector of El Salvador

IEEJ: August 2012 All Right Reserved

The Energy Sector of El Salvador
Energy Policy of El Salvador•strategic guidelines
I.

Diversification of the energy mix andpromotion of renewable energy

II.

Strengthening the institutionalframework of the energy sector anduser protection

III.

Promotion of a new culture ofefficiency and energy savings

IV. Expansion of coverage andpreferential rates
V. Innovation and technologicaldevelopment
VI. Regional energy integration

IEEJ: August 2012 All Right Reserved

The Energy Sector of El Salvador
Energy Policy: Achievements of each strategic guideline
I. Diversification of the energy mix and promotion ofrenewable energy:–

Preparation of Master Plan for Development ofRenewable Energy–

Modification of the legal framework for thepromotion of renewable energies–Creation of a draft law for biofuels (ethanol andbiodiesel)–

Launches of bids for long-term contracts in theelectricity supply, giving priority to technologies
based on renewable sources.

–Creation of an energy solar map–

Expansion of Berlin Geothermal Power Plant throughthe Clean Development Mechanism.

–

Cogeneration projects using bagasse (Izalco and ElAngel) through the Clean Development Mechanism.

–

Introduction of ethanol.

IEEJ: August 2012 All Right Reserved

The Energy Sector of El Salvador
Energy Policy: Achievements of each strategic guideline
2. Strengthening the institutional framework of the energy
sector and user protection– Long term contracts for electricity generation– Implementation of the Regulations of Operation
Based on Production Costs in the electricitymarket.
– Reference prices for fuel and diesel intransportation– Strengthening of the regulatory entities to attend
with balance the interest of providers and users– Strengthening the current regulatory frameworkwith focus on protection of users– Mechanisms for user protectionIEEJ: August 2012 All Right Reserved

The Energy Sector of El Salvador
Energy Policy: Achievements of each strategic guideline
3. Promotion of a new culture of efficiency and energy savings–Creation of committees of energy efficiency in all thegovernmental institutions.

–

Implementation of the project PNUD/GEF: Energy Efficiency inPublics Buildings–Project for Energy Efficiency in Publics Hospitals.

–Creation of Draft Law for Energy Efficiency–

Implementation of the program “El Salvador saves energy”.
Starting with the governmental institutions.

–

Studies to manage the electricity demand in El Salvador–

Project Pilot for efficient illumination in the municipality ofSanta Ana,–

Participation in the management committee of the Networkfor Energy Efficiency for Latin America and the Caribe.

IEEJ: August 2012 All Right Reserved

The Energy Sector of El Salvador
Energy Policy: Achievements of each strategic guideline
4. Expansion of coverage and preferential rates– Rural electrification with photovoltaic energy
in the north Salvadoran region, by means ofthe Millennium Challenge Account– Subsidy to consumption of electrical energy tolow income families– Total electrification of the 100 poorest
municipalities of El Salvador– National plan of rural electrification– Subsidy focalization• Electric energy• Liquefied petroleum gas• Transportation

Rural Electrification in % to 2008

IEEJ: August 2012 All Right Reserved

The Energy Sector of El Salvador
Energy Policy: Achievements of each strategic guideline
5. Innovation and technological development– Regional center of geothermal research– Program of research with universities andnational research centers– Program of research to implement
efficient systems of public transportation– Installation of laboratories for analysis ofbiofuel (mostly biodiesel)– Proposal to create a credit line to help in
the modification of vehicles to use LPG
as fuelIEEJ: August 2012 All Right Reserved

The Energy Sector of El Salvador
Energy Policy: Achievements of each strategic guideline
6. Regional energy integration.
– Regional electricity market– Program of Mesoamerican energy integration– Electricity market in Central America• Support to SIEPAC project• Participation in the definition of theregional market of electricity– Participation in the regional energy
coordination and institutionalism– Participation in the regional project of natural
gas and liquefied petroleum gas– Participation in Mesoamerican group ofbiofuels

IEEJ: August 2012 All Right Reserved

STATISTICS OF ENERGY DEMAND AND
SUPPLYIEEJ: August 2012 All Right ReservedStatistics of energy demand and supply

IEEJ: August 2012 All Right Reserved

Statistics of energy demand and supply
Outlook of Energy Demand and Supply
Forecast of demand for Electricity

Year

ProjectPower (MW)2011

Expansion of El Angel sugarmill

15

2012

Contract Xacbal

30

2013

Expansion of La Cabaña sugarmill

15hydroelectric plant "El Chaparral"

66

Geothermal Optimization ofAhuachapan

5

Expansion of hydroelectric plant "5 denoviembre"

80

Geothermal Berlín, unit 6

5Natural Gas Combined Cycle – a250

Natural Gas Combined Cycle – b107

Geothermal plant Chinameca

47201520162017

Evolution of the annual generation

Geothermal Berlín, unit 526

Natural Gas Combined Cycle - b143

2019

Medium speed engines for natural gas

100

2020

Medium speed engines for natural gas

100

2021

Medium speed engines for natural gas

100

2023

Natural Gas Combined Cycle - c250

2026

Natural Gas Combined Cycle - d250

IEEJ: August 2012 All Right Reserved

CHALLENGES IN THE FORMULATION OF
THE ENERGY POLICYIEEJ: August 2012 All Right Reserved

challenges in the formulation of the Energy Policy
 For the implementation of the Energy Policy in El Salvador,
the biggest challenge is to harmonize the social andenvironmental

issueswiththeobjectivesofenergy

developing.
 Misinformation about the new technologies, such as Natural
Gas or Coal Plants for example.
 Political unification for decision process Lack of effective monitoring mechanisms for the Energy
Policy (measures).
 Lack of a systematic participative mechanism to improveenergy policies.

IEEJ: August 2012 All Right Reserved

Thank you
Questions?

Contact : report@tky.ieej.or.jp