El Salvador increased its energy exports during the first half of 2026, but ended the period with a net import balance of 36.02 GWh in the Regional Electricity Market (MER) . The country registered 464.39 GWh of injections and 500.42 GWh of withdrawals, a difference that requires a more nuanced assessment of the 76.7% growth reported nationally.
Compared to the first half of 2025, the regional deficit decreased by 32.83% , although this improvement was not due to a drop in purchases. Injections increased by 6.50%, to 464.39 GWh, while withdrawals grew by 2.19%, to 500.42 GWh.
The key lies in distinguishing what each source measures. The Transactions Unit (UT) records physical flows , while the Regional Operating Entity (EOR) counts commercial transactions between agents in the six countries that make up the MER . Both metrics describe different dimensions of the market and are not interchangeable.
In turn, the amounts declared to the Central Reserve Bank (BCR) are subject to administrative deadlines that do not necessarily coincide with the month in which each operation occurred , so directly comparing these figures with regional settlements may lead to incomplete conclusions.
Analyzing only exports also leaves out a key variable: imports made during the same period . A country's trade position in the MER arises from the balance between both operations, not from the isolated performance of one of them.
“ Importing regional energy does not express a lack, but rather the search for price alternatives in the face of local generation that has become more expensive ,” said Félix Eduardo Zelaya Lazo, consultant for the energy sector in Latin America and the Caribbean (LAC) .
The Salvadoran behavior occurred in a scenario where all the countries of the Central American isthmus, with the exception of Panama, were net importers during the first half of 2026 .
Within that context, El Salvador's exposure was considerably lower than that recorded by other systems. The 36.02 GWh import balance represented less than 1% of the national demand for the period .
Nicaragua reached a net position of -685.66 GWh and covered approximately a quarter of its demand with the regional market's import balance. Honduras registered -210.08 GWh, equivalent to about 4% of its consumption.
Costa Rica also changed its usual behavior. The country, traditionally an exporter during the first half of the year, reduced its energy injections by 84% and moved to a net import position of 102.44 GWh , in a context of preserving reservoirs in anticipation of a dry year.
In El Salvador, the MER balance coincided with a significant increase in demand and a contraction in hydroelectric generation , two variables that put pressure on the supply structure during the period.
The average monthly demand for April and May was 8.7% higher than that recorded in the same period of 2025. Furthermore, on June 30 at 7:30 p.m., the Salvadoran system reached a record high power demand of 1288 MW .
Hydropower falls to 2017 levels
One of the most significant changes in the energy mix occurred in hydroelectricity. Generation from this source decreased by 22.74% year-on-year , from 690.80 GWh in the first half of 2025 to 533.71 GWh in the same period of 2026.
The volume represents the lowest level of hydroelectric production for a first half of the year since 2017 and reduced its share within the national matrix to 14.24%.
The percentage was even lower than the 14.54% observed during the 2023 El Niño . A historical comparison allows us to understand the decline: in 2021, this source represented 26.99% of generation, and in 2025 it still only reached 19.01%.
“ The country is making progress in renewables, but the starting point requires us to be realistic ,” Zelaya warned.
The reduced contribution from reservoirs put pressure on thermal power dispatch. During May and June, thermal power plants set the price in 99.9% of the periods , mainly through bunker fuel and diesel generation, in addition to natural gas during certain intervals.
For the semester as a whole, thermal sources accounted for 94.9% of the hours , compared to just 1.7% for hydroelectricity. Within the energy mix, conventional thermal generation and natural gas combined accounted for 42.37%.
The increased weight of these technologies was reflected in prices. The median marginal operating cost rose from $71.26 per MWh in March to $170.21 per MWh in June , making the regional market more attractive as an alternative to a more expensive domestic supply.
The Cerrón Grande reservoir also reached its lowest level in recent years in May. However, the subsequent recovery was faster than in 2023, and by the end of July, its level was significantly higher than that recorded on that occasion.
This evolution may be due, at least in part, to a deliberate management of water resources , through the restriction of dispatch to accumulate water and preserve availability for more demanding months.
“ Even so, with the level of demand we have today, a better reservoir level is no longer a guarantee of anything ,” the consultant stated.
The combination of higher consumption and lower hydroelectric output opens the possibility of even more intensive use of conventional generation during the second half of the year.
“ With this outlook, the second half of the year is expected to see record levels of conventional thermal power generation ,” Zelaya predicted.
Solar and wind power break records
The decline in hydroelectric power contrasted with simultaneous record highs in solar and wind power generation for the first half of the year .
Photovoltaic production grew 10.80% to 332.31 GWh , while wind power increased 29.10% to 106.22 GWh. Together, these two technologies contributed 11.70% of the energy mix for the first half of the year and approached the relative share of hydroelectricity for the first time.
Solar power also solidified its position as the country's leading technology in terms of installed capacity. With the commissioning of Olocuilta Solar (43.9 MWp) and Santa Ana IV (also 43.9 MWp) in 2026, El Salvador surpassed 890 MWp of installed photovoltaic capacity.
According to Zelaya, the country currently ranks first in Central America in solar photovoltaic capacity , although approximately 68% of that power is connected to distribution networks.
This configuration means that a significant portion of its contribution does not appear directly as generation in the wholesale market . Its effect is observed indirectly through the reduction in demand that distributors transfer to the system.
This scheme could be progressively modified with the reform of the General Electricity Law published in April 2026, which introduces changes in the relationship between the wholesale and retail markets.
Exporting does not necessarily mean generating
Another key factor in interpreting the Salvadoran figures is the trading activity carried out by the marketers .
During the semester, around 66% of El Salvador's exports were carried out through operations in which agents bought electricity in the Regional Contract Market and subsequently sold it in the Regional Opportunity Market.
This implies that a significant portion of the energy counted as exports did not originate from Salvadoran power plants , but rather corresponded to electricity acquired in other countries and subsequently marketed by local agents.
“ A large part of what is recorded as exports corresponds to energy from other countries in the MER marketed by Salvadoran agents, not to a competitive surplus generated in the country ,” Zelaya explained.
This activity demonstrates that El Salvador developed a significant capacity to intermediate electricity within the Central American market , even without necessarily having structural production surpluses.
Regional prices complete the explanation of the evolution of export-related revenues. During the first half of the year, the average settlement price for injections not committed to contracts was $123.41 per MWh , an increase of 10.08%.
The average price for withdrawals reached $113.53 per MWh, a year-on-year increase of 20.70%. In the second quarter, withdrawals reached $159.22 per MWh, exceeding the $157.01 per MWh recorded for injections .
Therefore, there is a price effect that helps explain higher export earnings , without this necessarily implying an equivalent expansion of the physical surpluses of national generation.
BESS: Arbitration today, exports tomorrow
Battery energy storage (BESS) is emerging as one of the tools capable of changing this equation. According to Zelaya, BESS systems can add value in four dimensions: internal arbitrage, export capacity, grid relief, and system services .
During the first half of 2026, the marginal cost averaged $106.74 per MWh during solar hours and $122.89 per MWh outside of them , a gap of $16.15 per MWh.
When the periods were separated by demand level, the difference between low and high demand reached $21.57 per MWh . In June, the opportunity was even more pronounced: electricity averaged $155.31 per MWh during daylight hours and $196.02 per MWh during peak demand.
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The difference thus exceeded $40 per MWh , while in May it had been around $35 per MWh. Solar hours represented only 29% of the first half of the year, meaning the cheapest energy in the system is concentrated in a limited time frame.
A battery system would allow electricity to be stored during periods of lower cost and discharged during peak times, reducing thermal dispatch through peak shaving strategies .
This internal arbitrage could have an additional effect on regional trade. By covering part of the peak demand with previously stored energy, the system would free up capacity to inject electricity into the MER during peak hours .
The economic incentive is significant. The average price of injections in the El Salvador control area reached $157.01 per MWh during the second quarter and registered a maximum of $185.90 per MWh in May .
In this scheme, the possibility of exporting arises as a consequence of first resolving the internal supply and reducing the use of thermal generation during peak demand hours .
Batteries could also alleviate infrastructure constraints. Currently, there are solar projects in the eastern part of the country that face limitations in connecting to the grid due to a lack of available capacity.
The strategic installation of BESS would decongest certain points and enable new renewable generation , not just optimize the use of existing assets. The Salvadoran Transmission Company (ETESAL) is already evaluating the incorporation of storage into its infrastructure.
The main challenge, however, remains regulatory. The reform of the General Electricity Law incorporated the concept of storage systems for the first time and contemplates their interconnection to the grid and the provision of services.
“ But defining is not enabling ,” Zelaya remarked.
Article 32-H allows distributed generators with supply contracts to incorporate storage to provide their own primary or secondary frequency regulation reserve.
The current scope is limited to self-supply of reserve within the retail market and does not yet enable full participation of these technologies within the wholesale market.
Regulatory development will need to define whether a BESS can perform arbitrage, compete in balance services, operate as an independent asset and, especially, participate in export operations through the MER .
Mexico offers a reference point regarding the scope that such regulation can reach. The provisions published by the National Energy Commission in April 2026 establish five participation modalities for storage systems, ranging from self-consumption to non-associated storage with full participation in the wholesale market, and incorporate the figure of the Storage Facility as an autonomous regulated activity.
Can El Salvador become a net renewable energy exporter?
The starting point shows significant progress in clean energy sources, but also a still decisive role of conventional technologies in peak coverage .
During the first half of the year, renewables contributed 57.6% of the national electricity generation . Geothermal energy led the mix with 19.3%, followed by hydroelectricity with 14.2%, biomass with 12.3%, solar with 8.9%, and wind with 2.8%.
The remaining 42.4% came from conventional thermal generation and natural gas, which continue to play a structural role in covering periods of higher demand .
The long-term strategy aims to modify that composition. In the short term, the path forward involves expanding geothermal and solar photovoltaic capacity, as well as developing a second wind farm.
Looking further ahead, El Salvador is also exploring the development of nuclear energy for peaceful purposes , with an eventual incorporation planned from the period 2030-2035.
However, the expansion of power generation requires prior reinforcement of the transmission network . In eastern El Salvador, there are already solar projects that cannot be interconnected due to a lack of available capacity.
National transmission is handled by ETESAL, and its development currently depends on government support. In certain areas, BESS (Basic Service Energy Services) can represent a short-term alternative to alleviate congestion and facilitate new connections.
At the regional level, it is also necessary to expand the capacity of the Central American Electrical Interconnection System (SIEPAC) . Having competitively priced energy loses its value if congestion or high transmission costs prevent it from being sold in other markets.
“ Becoming a net exporter of renewable electricity is possible, but it will come as a result of first resolving transmission (national and regional) and providing regulatory predictability to long-term contracts ,” Zelaya said.
Export capacity can also be supported by an advantage that the country has already developed: regional trading .
Commercial intermediation accounted for about two-thirds of Salvadoran exports in the semester and could serve as a basis for consolidating El Salvador as a hub for Central American electricity trade .
Moving in that direction requires expanding the Regional Transmission Network, improving regulatory frameworks to enable contracts longer than one year with associated transmission rights, and developing a more predictable regulatory, financial, and technological ecosystem .
The advantage of this route over building new generation power is that it takes advantage of a commercial capacity already developed by Salvadoran agents and does not depend exclusively on adding new power to the system.
New rules for incorporating renewables
El Salvador is also undergoing a reorganization of the scheme used to hire new generation.
During the last few years, much of the new capacity came in through distributed generation connected to distribution networks , rather than through the bidding processes traditionally associated with high-voltage projects.
The modality allowed for faster incorporation, although it reduced the capacity to plan which projects entered the system, where they connected, and under what economic conditions .
The reform of the General Electricity Law approved in April 2026 seeks to organize that space and recover competitive and informed processes.
The new framework introduces Supply and Distribution Contracts (CAD) , which must be awarded through competitive and transparent processes, either at the initiative of developers or the Directorate General of Energy, Hydrocarbons and Mines (DGEHM).
The DGEHM will also be responsible for defining the maximum distributed generation capacity that can be interconnected, both at the system level and per circuit. Therefore, the location of new projects must be adjusted to the effective capacity of the networks .
The reform also restricts distributed generators to selling only to distributors through CAD, preventing the same plant from participating simultaneously in the wholesale and retail market.
The operational details are still being developed. The regulations allow 12 months to establish the interconnection charge methodology and 18 months for the Transactions Unit to adapt its organization and Operating Regulations .
Until that framework is complete, it is difficult to anticipate a specific volume of new renewable power under the scheme.
In terms of large projects, one of the main focuses is on geothermal energy , with the Chinameca and San Vicente developments among the initiatives planned for tender.
Both projects would fall under the Geothermal Energy Law, published in September 2025 and in force since March 15, 2026.
The regulations establish a specific concession regime of up to 30 years with legislative approval , in addition to tax incentives and the obligation to implement a Geothermal Resource Sustainability Protocol.
“ The relevant thing at the moment is that El Salvador is simultaneously rebuilding two contracting schemes: the distribution scheme, with the CADs, and the geothermal scheme, with the new sectoral law ,” Zelaya highlighted.
The first half of the year thus left an energy picture marked by higher demand, lower hydroelectric generation, simultaneous records for solar and wind power, and a greater role for thermal power plants , while marketers deepened their participation in the MER.
The final balance of -36.02 GWh confirms that the 76.7% growth in exports is not enough, on its own, to describe El Salvador's energy position.
Future development will depend on the ability to add competitive generation, strengthen national and regional networks, enable storage and offer regulatory predictability , while trading maintains an increasingly relevant role within the Central American electricity market.