AES Corporation investment in El Salvador to improve and modernize the power grid
The development of technology has become vitally important to achieve the necessary amounts of energy, while at the same time carrying out activities that mitigate environmental damage. Undoubtedly, renewable energies are being increasingly adopted by companies in the energy sector, not only because they are sustainable, but also because they allow reducing the impact of pollution on the environment, as well as reducing the costs assumed by the consumer to a certain extent.
In El Salvador, AES is one of the largest companies that has been in the energy sector for 40 years and whose activities are mainly focused on three lines of business, namely energy distribution, energy generation and energy transition projects. Its purpose is to provide the population and certain entities with sustainable, non-polluting, and affordable energy. This company currently groups four distributors: CAESS, CLESA, EEO and DEUSEM, serving a demand of approximately 77% of the country’s market.
Therefore, it is relevant that by 2022, the company has earmarked an investment of USD 59.3 million for the promotion of renewable energies. This investment will be divided into the following areas: USD 35.5 million to improve and expand the energy distribution system and USD 23.8 million for innovation and digitalization, as well as technological implementation in its technical and commercial operations.
As part of this investment, Fabio Aragón, who is AES’ director of planning and engineering, indicated that there will be a renewal of more than 70,000 energy meters, expansion of lines that will be inspected and maintained by drones, as well as a rural electrification project. Likewise, another of the most important aspects he mentioned is the decarbonization or carbon dioxide reduction project for the benefit of the environment, through the operation of electric vehicles in the country, also hoping to increase the number of charging points, which is currently only 15.
Such renewable energy projects could be considered as a possible solution to the rising energy prices in El Salvador, which have resulted from the inflation that the Salvadoran economy is going through. As of today, such inflation is approximately 6.7%, according to the Central Reserve Bank, which is partly due to the Russia-Ukraine conflict. It should not be left aside that one of the direct economic consequences has been precisely the rise in oil prices, whose price per barrel in Texas, of reference in El Salvador, already exceeds USD 100.00.
Since the generation of electric energy in the country is still centered on thermal energy based on bunker, in which fuel derived from oil is used, it is considered that to date there has already been an increase of 10.8% in the price of electric energy compared to the prices maintained between October 15th, 2021, and January 14th of the current year, date in which the last update was given.
In short, it is becoming increasingly necessary to bet on investment projects such as the one to be carried out by AES El Salvador in renewable energy, as this has a significant contribution to mitigate environmental damage and in turn, favors the economy of residential, commercial, and industrial customers.
Valeria Romero
Associate
García & Bodán
El Salvador