New bill proposes private investment in El Salvador geothermal sector
Legislative Assembly of El Salvador (source: Casa Presidencial , El Salvador, CC0, via Wikimedia Commons)
Carlo Cariaga
4 Sep 2025
A proposed bill in El Salvador seeks to establish a framework for prospecting and exploitation of geothermal sites that allows for private participation.
The President of the Republic of El Salvador, through the Ministry of Economy, has promoted a new Geothermal Energy Bill which is now being introduced into the Legislative Assembly. The bill proposes the establishment of a legal framework for the prospecting, exploration, and exploitation of geothermal resources in the country that also allows for participation of private entities.
According to the proposal, the General Directorate of Hydroelectric and Mining Energy (DGEHM) will act as the administrative authority responsible for enforcing compliance with the regulations, as well as processing permits, authorizations, and concessions. The agency will also identify areas with geothermal potential and put these out to tender to investors, who will then benefit from tax benefits for the first 10 years, as well as exemption from tariffs, income tax, and other duties.
Under the proposal, a project is developed through three stages:
- Prospecting – this requires only a permit, which lasts 12 months and can be extended
- Exploration – this allows for the technical evaluation of the reservoir and the obligation to reinject geothermal fluids; exploration permits are granted for areas up to 50 square kilometers, and last 36 months which can then be extended once for 24 months
- Exploitation – this allows for geothermal resource exploitation through concessions of up to 30 years, subject to approval by the Legislature
The proposed regulation also includes provision on environmental and water resource protection, the creation of a Geothermal Registry, the requirement to submit financial and technical reports, and corresponding sanctions and fines for violations. If the law is approved, it will go into power six months after publication in the Official Gazette.
El Salvador has played a key role as the leader of the geothermal energy sector in Central America. The country operates two geothermal plants, both under state-owned LaGeo, with an installed capacity of 204 MWe. Just a few months ago, the Ahuachapan geothermal power station celebrated a major milestone with the 50th anniversary of its start of commercial operations.
Source: La Noticia and El Diario
