Central America's energy advantage is under its feet
3 minute readPublished: Tuesday, May 5, 2026 at 1:32 pm
Central America's Geothermal Potential: An Untapped Energy Advantage
Central America possesses a significant, yet largely untapped, clean energy resource: geothermal power. The region sits atop a geothermally active zone, boasting numerous volcanoes and thermal water sources, with an estimated potential of 3,000 to 5,000 megawatts of viable geothermal energy. However, only around 650 megawatts are currently in operation.
El Salvador serves as a prime example of geothermal's potential. Geothermal energy accounts for approximately 21% of the country's electricity supply. The World Bank's recent $150 million loan to El Salvador will fund a new geothermal plant and exploratory drilling, highlighting the growing interest in this resource.
Geothermal energy offers several advantages. Unlike solar and wind, it provides "firm" power, operating consistently regardless of weather conditions. This reliability is crucial, especially as hydropower, a traditional source, faces challenges from climate variability.
Central America also benefits from a regional electricity market, the Central American Electrical Interconnection System (SIEPAC), which links six countries with high-voltage transmission lines. This infrastructure facilitates cross-border electricity trade, allowing countries to share resources and balance energy needs.
The expansion of geothermal generation, coupled with SIEPAC's existing infrastructure, presents a significant opportunity for the region. It can stabilize renewable sources like solar and wind, reduce reliance on imported fossil fuels, and support the growing manufacturing and nearshoring sectors.
The primary barrier to geothermal development is the high cost of exploratory drilling, which can deter private investment. Risk-sharing mechanisms and concessional financing are available, but a coordinated regional strategy is needed. This strategy should include harmonized regulations, regional-scale funding for exploration, and a commitment from governments and development lenders to prioritize geothermal development.
BNN's Perspective: Central America's geothermal potential represents a compelling opportunity for energy independence and economic growth. The region's existing infrastructure and the reliability of geothermal power make it a promising alternative to fluctuating fossil fuel markets. A coordinated regional approach, supported by international financing and streamlined regulations, is essential to unlock this valuable resource and secure a sustainable energy future for Central America.
Keywords: Central America, geothermal energy, renewable energy, SIEPAC, El Salvador, World Bank, clean energy, energy independence, regional electricity market, energy infrastructure.