Bitcoin and El Salvador's electric power generation
Just after Nayib Bukele announced that El Salvador would be the first country in the world to make Bitcoin legal tender, he also made headlines by suggesting there was "volcano energy" to attract Bitcoin miners to come to the country.
In light of the very energy-intensive nature of Bitcoin mining, it makes sense to understand the overall state of electric power generation in El Salvador. Global bitcoin-mining currently consumes more electricity than the country of Argentina.Official data on electricity generation and use in El Salvador is maintained by Unidad de Transacciones S.A de C.V. which administers the transmission and market for electricity. As shown in the chart below, the four principal sources of electric power in El Salvador currently are hydropower, fossil fuels (primarily bunker diesel power generation), geothermal, and imports (primarily from Guatemala). Renewable sources such as solar, biomass, and wind made up a small but growing 9% of total electricity sources.
In the next few years there will be real additions to the domestic installed electrical generating capacity in El Salvador as a liquefied natural gas generation facility comes online and the El Chaparral dam project is completed. El Salvador is also seeing the addition of various sources of wind and solar power generation. These new sources could reduce the country's imports of electricity or reduce the use of expensive and relatively costly and dirty diesel generators.
For a comprehensive look at fuel consumption in El Salvador, check out the report prepared by the International Renewable Energy Agency: Renewable Readiness Assessment - El Salvador issued in September 2020 and produced in conjunction with the Salvadoran government.
The liquefied natural gas facility Energía del Pacífico is in the final phases of construction at the port of Acajutla. The cost of roughly $1 billion makes this a true mega-project for the country. The owner is Chicago-based Invenergy, and the plant consists of a liquefied natural gas facility offshore at the port, where the liquid is returned to gas form and sent through a pipeline to the power plant onshore. The natural gas then powers turbines to generate electricity. Natural gas, although a fossil fuel, burns much cleaner than the bunker diesel fuel which is currently in use in El Salvador.