Government backs geothermal project in Chinameca, El Salvador
The Ahuachapán Geothermal Power Plant, El Salvador (source: LaGeo)
Alexander Richter
5 Jun 2025
El Salvador has approved a financial guarantee for a World Bank loan that could advance CEL’s 25 MW Chinameca geothermal project and future expansion phases.
El Salvador has taken a key step toward developing a new geothermal power plant in Chinameca with the approval of a sovereign guarantee for a loan from the World Bank. The measure, recently ratified by the Legislative Assembly, supports the financing of a 25 MW geothermal project led by state-owned utility CEL (Comisión Ejecutiva Hidroeléctrica del Río Lempa).
The loan will be used to fund construction of the Chinameca geothermal plant on the southern flank of the Chinameca Volcano in the department of San Miguel. The loan managed by CEL will have a 30-year repayment term, including a six-year grace period. The project is expected to generate clean, baseload electricity and contribute to the country’s renewable energy goals.
The project includes four parts: the first involves drilling up to eight wells to confirm geothermal resources, thereby confirming the expansion of production capacity and increasing steam production. The second component of the loan covers the construction of a geothermal power plant in Chinameca , San Miguel, with a capacity of up to 25 MW; as well as a steam collection system for the Chinameca power plant, and the construction of a connection from that plant to the substation to be built to connect the new plant to the national grid.
The third component of the loan involves the adoption of social and environmental programs and the creation of a Geothermal Center of Excellence “to train students and professionals in industry-related topics,” the Ministry of Finance noted.
Finally, the last component to be implemented is the hiring of experts to provide technical assistance and support management areas in the execution.
In its initial phase, the plant will provide 25 MW of capacity, with CEL also outlining the potential for a second-phase expansion to 40 MW in total. According to La Prensa Gráfica, the project’s development had long been on hold, and this financial backing could unlock progress toward implementation.
The loan is part of a broader agreement with the World Bank to support renewable energy infrastructure and energy security in El Salvador. The sovereign guarantee ensures state support for repayment, which is a key condition for disbursing the funds.
The geothermal sector plays an important role in El Salvador’s energy mix, and the Chinameca project adds to ongoing efforts to expand generation capacity through sustainable domestic resources.
Source: LaPrensa Grafica
