El Salvador’s Minister of Environment, Fernando López, has submitted to the Legislative Assembly a new Law to Promote the Use of Renewable Energy, which would grant full tax exemptions on the import, sale, installation, and maintenance of renewable energy generation systems.

Under the proposal, the fiscal benefits would remain in force for ten years. Both suppliers and end users would qualify for these incentives, provided they register as taxpayers. End users would also be able to deduct from their taxable income the expenses related to the purchase or installation of renewable systems.

The Superintendency of Electricity and Telecommunications (SIGET) would oversee the regulation of requirements for both providers and users, establish a catalog of approved systems, and issue a tariff schedule for surplus energy injected into the national grid. SIGET would have 60 days to issue the corresponding regulations once the law is approved.

It is essential to create a legislative framework that truly encourages the transition to clean energy, the government stated, noting that existing regulations since 2017 allow users to feed excess energy into the grid but do not include fiscal incentives.

If approved, the law would exempt renewable energy operations from income tax, value-added tax (VAT), and import duties for a decade, positioning El Salvador as a regional leader in promoting sustainable and decentralized energy generation.