El Salvador is taking a major step in advancing its renewable energy sector with the approval of the new Geothermal Energy Law, designed to diversify the country’s energy mix, attract investment, and ensure a reliable electricity supply. The legislation, published in the Official Gazette on September 16, 2025, will take effect on March 16, 2026, establishing clear regulations for the prospecting, exploration, and sustainable exploitation of geothermal resources.
Academics, including Óscar Peñate, Mauricio Rodríguez, and Nelson Flores, emphasize that the law is crucial for the development of reliable energy for households and economic activities. By reducing dependency on imported fossil fuels and other energy types, the legislation is expected to minimize electricity rationing and strengthen energy security nationwide.
“This new law is another commitment by the country to promote alternative energy developments for electricity, refrigeration, and other uses,” explains Flores, a public administration specialist. He adds that geothermal energy offers climate-independent, health-friendly, and sustainable energy solutions while supporting local economic growth.
In addition to diversifying the energy matrix, which in 2024 included solar, hydroelectric, and photovoltaic sources, the law provides tax incentives, such as a 10-year tariff exemption on machinery and materials for geothermal plant construction or expansion. Peñate highlights that the regulation “creates the conditions for domestic and foreign investment, boosting industrial development and economic revitalization.”
With the new Geothermal Energy Law, El Salvador positions itself as a regional leader in sustainable energy, offering opportunities for job creation, private investment, and a modernized electricity sector that supports the country’s long-term economic growth and energy independence.
