30 October 2026
President Nayib Bukele and Cox Group signed a US$2.9 billion energy modernisation agenda that hopes to underpin the country’s ambitious tourism and industrial plans.
The capital programme is equivalent to roughly 7% of the country’s GDP and will include natural gas and solar panel projects. The investment will also seek to avoid energy rationing and aims to shore up the national grid.
“This is the largest investment in the history of El Salvador,” claimed President Bukele. “It will generate benefits for the entire population such as a decrease in electricity rates.”
This will enable El Salvador to secure investment in other areas it wants to attract, especially in technology. These include data centres, agro-processing, tourism and construction. It will also reduce the dependence on imported fossil fuels and improve electricity availability whilst lowering energy costs. Diversifying the generation matrix has been a goal of Bukele with Honduras as a neighbour, their continued electricity issues are a warning to the region.
US$1.8bn will go towards natural gas-fired power plants and US$300mn to photovoltaic parks and battery storage technology. Currently the country has more than 700MW of solar energy capacity as well as wind farms, geothermal and hydroelectric power plants. A further US$600mn will be spent on water sanitation.
ETESAL is implementing a work plan to ensure current flows without interruptions and at the appropriate voltage, which influences service cost and durability of household appliances. The institution plans to build a 230,000-volt line along the Pacific coast to connect the national system with a new route taking in the departments of San Miguel and Morazán. This will allow those areas to attract industrial and commercial projects.
El Salvador also plans to begin operating smart valve technology in November. This allows for the control and redirection of energy flow through high-voltage lines without the need to construct additional towers.
Building resilient infrastructure has been a rallying cry across Central America and the Caribbean. Yet there have been few projects of this scale to safeguard infrastructure against natural disasters. Given the current elongated dry season caused by El Niño, which is due to last into 2027, the modernisation would improve periods of high demand and hydrological stress.
The projects will also create construction employment and longer-term technical roles in plant operation, maintenance and grid management. This ties in neatly with El Salvador’s nuclear energy ambitions having joined the IAEA and started feasibility studies on developing the sector.
Enrique Riquelme, Grupo Cox CEO said, “We want to be part of El Salvador’s success story. This is possible thanks to the work of our teams, designing and seeing how we can contribute our grain of sand to this story.”
For investors, questions remain on contract structure, tariff regulation, transmission capacity, land access and purchase, as well as credibility of project timelines. For households and small firms the social benefit of a more diverse energy matrix will only be felt at their bottom line. Improving energy sources without reducing costs will force excess electricity to be sold in the regional market and increase infrastructure costs.
With a recent upgrade to its growth outlook, CEPAL is the latest agency to project El Salvador’s GDP increase at 4.5% for 2026, energy planning is paramount for sustaining private investment.
“The investment Grupo Cox is making in El Salvador is also an enabler of other investments that will come,” added Bukele.
Source: Central America Briefing | Vol 14, Issue 20
Photo Credit: https://www.facebook.com/nayibbukele/photos?locale=en_GB