Central to the initiative is the construction of a 25 MW geothermal power plant at the Chinameca Geothermal Field, located 115 kilometers east of San Salvador. State-owned energy company LaGeo, which manages the country’s geothermal resources, will implement the project. In addition to developing the plant, exploratory drilling and resource evaluation will be conducted to support the potential expansion of up to 40 MW of additional renewable capacity.
By tapping into the country’s rich geothermal potential, the project aims to reduce dependence on fossil fuels, stabilize energy costs, and increase national grid resilience. The power plant will be directly connected to the national power transmission system, enhancing electricity access for homes, hospitals, schools, and businesses across El Salvador.
“This World Bank-financed project is an important step in strengthening our energy system and promoting sustainable and inclusive development,” said 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.”
Beyond power generation, the project introduces innovative uses of geothermal heat for direct applications, such as drying and processing agricultural products. These geothermal direct-use opportunities will support local agribusiness development, particularly in rural areas, and improve the livelihoods of surrounding communities.
Job creation during the construction and operation phases is another vital component, bringing employment opportunities to residents around the Chinameca site. This localized economic boost is part of the project’s broader goal to ensure inclusivity and equitable development outcomes.
According to the World Bank, the project will improve CEL’s operational capacity, enabling it to better manage national energy demand and ensure uninterrupted supply. This is especially critical for essential services like healthcare and education, as well as for supporting El Salvador’s growing business sector.
“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,” said Carine Clert, World Bank Country Manager for El Salvador and Costa Rica. “We will work closely with LaGeo to ensure that the project will be successful and help reduce emissions and create green jobs.”
The project also aligns with global climate commitments by enabling El Salvador to reduce greenhouse gas emissions and transition away from carbon-intensive energy sources.
The $150 million loan is financed by the International Bank for Reconstruction and Development (IBRD) and comes with favorable terms—a variable rate structure, 30-year maturity, and six-year grace period. These conditions offer El Salvador the financial flexibility to invest in infrastructure today while planning for long-term fiscal sustainability.
