El Salvador is strengthening its position as one of Central America’s most attractive renewable energy markets following the approval of a new law designed to accelerate solar power and energy storage adoption. Passed in October 2025, the Renewable Energy Promotion Law introduces significant tax incentives aimed at encouraging both local and foreign companies to invest in clean energy systems.
Under the legislation, businesses that acquire and implement renewable energy systems for self-consumption through qualified providers are exempt from value-added tax (VAT). The incentives also apply to energy storage systems, including their installation, operation, and maintenance, creating a comprehensive framework that supports long-term energy efficiency and cost reduction.
The policy comes as solar energy continues to expand rapidly across the country. According to data from the Superintendencia General de Electricidad y Telecomunicaciones (SIGET), solar power now accounts for 21.1 percent of national electricity production, supported by 633 megawatts of installed capacity. Notably, 97 percent of the country’s generation plants are photovoltaic facilities, reflecting El Salvador’s strategic use of its abundant sunlight.
Óscar Funes, CEO of Trinergy Ecosystem, said the law creates a clear pathway for companies seeking greater competitiveness through energy independence. This law represents a concrete opportunity for companies in El Salvador to move toward a more efficient and competitive energy model. Renewable self-consumption, combined with proper storage solutions, allows businesses not only to optimize costs but also to actively contribute to the sustainability of the national energy system, he stated.
Industry specialists view the measure as part of a broader national strategy to reduce external energy dependence, improve efficiency, and align the country with global trends toward decentralized and environmentally responsible energy models. For U.S. investors and companies exploring expansion opportunities in Latin America, El Salvador’s new framework signals a market increasingly open to innovation, sustainability, and long-term clean energy growth.