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6 Policies and Actions El Salvador has never had legislation specifically targeting geothermal development directly. Rather, several key components of government initiatives and policies with respect to the wider power sector have helped move the geothermal power industry forward over the past fifty years: Reducing outages, increasing electrification Firstly, the government of El Salvador has maintained a national objective of increasing electrification – which stands at 65% -- and reducing power outages. It is undisputed that the availability of adequate, reliable, affordable energy is integral to economic development. The thrust from the government comes not only in order to improve the investment climate, but also to improve production efficiency in industry and raise the standard of living for citizens. Large factories and industrial parks tend to have their own power backup generators. Infrastructure and weather problems cause frequent service interruptions. Hydroelectric power plants, which provide about 30% of the generating capacity of El Salvador are highly dependent on seasonal rains, whilst fossil fuel imports are relatively expensive. A 1999 DOE report states that geothermal power is the cheapest generating source for base load energy in El Salvador. This has helped prioritize geothermal power projects among other national objectives. Electricity Reform Act Perhaps the most important government action impacting geothermal power generation in El Salvador in the past decade has been the privatization of the power sector. In 1996, the Electricity Reform Act was passed, making the power sector in El Salvador among the most liberalized in the world (Engel, 2003). The reform of the power sector moved the market from a state-owned monopoly to an open power market with mainly private players. Today, the power sector has five types of market participants: generators, traders, transmitters, distributors and consumers. A new autonomous agency, the Superintendencia General de Electricidad y Telecomunicaciones (SIGET) was created to oversee and regulate the electricity and telecommunications industries. SIGET is responsible for setting transmission and distribution costs, resolving disputes among Spring 2004 The Geothermal Energy Industry of El Salvador 16 Janelle PrevostPDF Image | Geothermal Energy Industry of El Salvador
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