Last Thursday El Salvador's legislature approved an extension to tax incentives for renewable energy projects which were set to expire at the end of 2015. Thanks to a reform of the bill, it is now possible for projects larger than 20 MW to access incentives.
The newly approved amendments to the Law of Tax Incentives for the Development of Renewable Energy and the Generation of Electricity maintains the principle in the previous law that smaller projects will receive a higher level of benefits.
Projects up to 10 MW will continue to be fully exempt from taxes on income for 10 years, while projects larger than 5 MW wil be exempt for five years. The new law also states that additional phases of a project can benefit from incentives, which until now was not part of the law.
GTM Research Senior Analyst Adam James notes that like most Central American nations, tax incentives are a key driver for renewable energy in El Salvador. The tax incentives were one of the most attractive things about El Salvador's solar market, notes James. Having them expire would have been a negative development for renewable energy deployment.
In El Salvador various auctions for renewable energy projects have been held, for both distributed generation and utility-scale projects. In the last two years more than 100 MW of solar projects have been approved, and it is estimated that the nation of only 6.3 million inhabitants will have 204 MW of solar PV online by 2018.
In August El Salvador announced that a new auction for 150 MW of solar and wind projects would be launched, with the assistance of USAID.
Translation and additional reporting by Christian Roselund.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
Popular content
Share
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.