World Bank announces $150 million investment for geothermal in El Salvador
The Ahuachapán Geothermal Power Plant, El Salvador (source: LaGeo)
Carlo Cariaga
31 Mar 2025
The World Bank will be investing $150 million over the next six years to advance geothermal power capacity growth and direct use applications in El Salvador.
The World Bank has approved a USD 150 million, six-year investment program that will support El Salvador in increasing their geothermal power generation capacity and harness geothermal heat for direct uses. Part of this investment will go towards the drilling of wells and construction of the Chinameca geothermal power plant.
This variable-spread loan is financed by the International Bank for Reconstruction and Development (IBRD) and has a maturity of 30 years, including a six-year grace period.
LAGEO, the state-owned company responsible for generating electricity using El Salvador’s geothermal resources, is the implementing agency of the “Geothermal Energy for Sustainable and Inclusive Development Project in El Salvador” program.
“The government’s commitment is to ensure that all Salvadorans have access to clean and affordable energy. This World Bank-financed project is an important step to strengthen our energy system and promote sustainable and inclusive development,” said Daniel Alvarez, the President of the Lempa River Hydroelectric Executive Commission (CEL), the parent company of LAGEO.
The project will provide financial resources for the following:
- Drilling campaign to confirm geothermal resources, including well drilling and assessments to confirm and characterize geothermal resource availability in the Chinameca field;
- Investment in Geothermal Electricity Generation Capacity, that will finance the construction of a geothermal power plant, including the steam and brine piping system
- Implementation of social and environmental programs to promote the direct use of geothermal waste heat for new economic opportunities in the communities around the geothermal plant within the Dry Corridor; implementation of mitigation measures for environmental and social impacts; and development of studies to support the creation of the Geothermal Center of Excellence that will facilitate local development and green job creation
- Technical Assistance and Project Implementation Support, to support LaGeo in strengthening its technical and administrative capacity to execute the project.
With this funding, LAGEO is now moving forward with the installation of an initial 25-MW power plant in the Chinameca geothermal field. Exploratory geothermal work will also be conducted at the same field to facilitate the development of up to 40 MW of additional power generation capacity.
During its construction and operation, the geothermal plant will generate jobs for people living in the communities surrounding the Chinameca Geothermal Field, located 115 km east of San Salvador. Additionally, local communities will be able to use the geothermal heat for direct uses, such as food drying and processing, thus benefitting the development of local agribusinesses.
“This project demonstrates our long-standing collaboration with the government of El Salvador in building a more resilient and prosperous future. Together with LAGEO, we will work towards the success of this intervention, which will contribute to reducing emissions and creating green jobs,” said Clarine Clert, World Bank Country Manager for El Salvador and Costa Rica.
This project will support the further growth of the geothermal sector in El Salvador, which currently has a total of 204 MWe of installed geothermal capacity between the Ahuachapan and Berlin geothermal power plants. LaGeo is also now in the process of testing a new 7-MW binary geothermal power plant in Berlin, which is expected to be operational later this year.
Source: Banco Mundial
