El Salvador announces auction for 150MW of renewables

With the support of USAID, El Salvador hopes to procure enough projects to power 250,000 households.

Continuing its commitment to renewable energy development, the National Energy Council (CNE) of El Salvador this week announced plans to auction 150 megawatts (MW) of renewables projects with an eye towards initiating works in Q4 2015 and bringing the projects into operation by 2018. 

The call to auction follows publication of a recent study conducted by the US Agency for International Development (USAID), which found that El Salvador has capacity to add 81.5MW of biomass power production by the end of the year; 170MW of solar power by 2016; 40MW of wind capacity by 2017; and 146MW of hydropower, 102MW of geothermal and 380MW of natural gas by 2021. USAID will assist El Salvador in managing the auction. El Salvador is the only Central American nation to commission such studies. 

As a result of a similar auction in 2014, 26 companies submitted bids to set up solar power projects, with three submissions accepted for development. 

The largest project approved for development in that tender was the 60MW joint venture of French Neoen and local Almaval, with that project locking in a 20-year power purchase agreement (PPA) at a tariff of $0.10 per kilowatt-hour (KWh).

UDP Proyecto La Trinidad and Solar Reserve Development were also cleared to develop 14MW and 20MW solar photovoltaic (PV) projects with $0.12 per KWh PPAs in that procurement, respectively, with the latter being the first large-scale solar PV project ever built in El Salvador.

As of the end of 2014, hydropower, geothermal and biomass produced 59 percent of El Salvador's electricity according to Clean Technica, with another 100MW of solar projects expected to come online next year as a result of the 2014 auction.

CNE estimates that the projects procured in this auction will produce enough energy to power 250,000 households, with the environmental benefit of reducing the amount of carbon dioxide emissions released into the atmosphere by approximately 160,000 tons.

The announced auction will be managed by General Superintendency of Electricity and Telecommunications (SIGET) in cooperation with the Transactions Unit (UT), CNE, and the Transmission Company of El Salvador (ETESAL), and with assistance provided by USAID and Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ), according to tender documents.

Projecting forward to 2018, CNE estimates that 53.1 percent of installed capacity of generation will come from renewable resources, with estimations denoting that diesel will provide 31.3 percent of energy needs (755.7MW); hydropower 25.6 percent (618.3MW); natural gas 15.7 percent (380MW); geothermal 9 percent (216.4MW); biomass and solar 8.4 percent each (202.5MW); and wind 1.7 percent (40MW).

In terms of gigawatt-hours (GWh) of electricity produced, CNE estimates that in 2018, natural gas will account for 31.4 percent of production (2246.90GWh); hydropower for 26.8 percent (1916.23GWh); geothermal for 23 percent (1644.72GWh); geothermal for 7 percent (499.07GWh); solar for 5.2 percent (374.76 GWh); biomass for 5 percent (361.1GWh); and wind for 1.6 percent (117.79GWh).

All projects selected in the upcoming auction are set to be developed on idle public land to be provided by the government.