A. M. 
The Technology, Tourism, and Investment Commission ruled in favor of the creation of the Geothermal Energy Law, a law that seeks to promote the sustainable and responsible use of this energy source for electricity generation and other productive purposes.
According to the bill, the Dirección General de Energía, Hidrocarburos y Minas (DGEHM) will be the institution responsible for regulating, supervising, and inspecting all geothermal-related activities, in addition to granting permits, registrations, and concessions that must subsequently be approved by the Legislative Assembly.
During the meeting, the deputies received the head of the DGEHM, Daniel Álvarez, who explained that this law will attract private investment, generate direct and indirect jobs, guarantee stable electricity prices, and advance the country’s energy independence.
“The goal is for national and foreign investors to propose projects for direct use or electricity generation”, said Álvarez, noting that the state maintains projects under development, but that demand exceeds its current capacity
Investment Incentives
The initiative includes tax incentives for those who invest in new projects or expansions of geothermal plants. The benefits include:
• Exemption from import tariffs for 10 years on machinery and equipment used exclusively for the projects.
• Income tax exemption for the same period on income derived from geothermal energy production and the sale of renewable energy certificates.
• Tax deduction for reinjection costs and pre-investment and electrical infrastructure work.
Regulatory Process
The draft law establishes three phases of participation: prospecting, exploration, and exploitation.
• Prospecting will require a permit issued by the DGEHM within a maximum period of 10 business days.
• Exploration must have prior authorization, after submitting a technical and financial program, with a resolution within 45 business days.
• Exploitation of the geothermal resource will only be possible through a concession approved by the Legislative Assembly, granting exclusive rights to the subsoil.
Impact on the Energy Matrix
Representative Elisa Rosales emphasized that this regulation responds to President Nayib Bukele’s vision of diversifying the energy matrix and moving toward cleaner generation.
“In 2018, low-carbon energy production accounted for 59%; by 2024, we will have reached 83%. This growth allows us to meet international commitments and guarantee cheaper energy for salvadorans”, Rosales said.
Currently, geothermal energy represents approximately 23% of the national energy mix, and with the implementation of this law, this percentage is expected to be further strengthened.
Penalties for Non-Compliance
The DGEHM will also have the authority to impose sanctions in the event of non-compliance. Serious violations will be fined between 5,000 and 7,500 times the minimum wage in the industrial sector, while very serious violations may be fined up to 10,000 times the minimum wage.
With this new legislation, El Salvador is poised to consolidate its position as a regional leader in the use of geothermal energy, driving sustainable development, competitiveness, and job creation in the energy sector.
