El Salvador wants to make its way into the green hydrogen market, but it has yet to translate that interest into concrete projects. Although the country is working on a regulatory roadmap and evaluating incentives to attract investment, there are currently no initiatives under development, and the main obstacle remains economic.
“I was involved in a green hydrogen project that was scrapped because it was economically unviable at the time,” explained Carlos Enrique Calderón Menéndez, a Salvadoran consultant specializing in renewable energy and energy efficiency. This starkly illustrates the sector's main bottleneck: without profitability, the market simply doesn't get off the ground.
Adding to this barrier is the lack of specific regulations to govern the industry. “The first step is to publish the regulations or the law providing incentives for green hydrogen,” Calderón Menéndez stated. Without regulation, clear incentives, and sufficient demand to justify investment, green hydrogen remains a medium-term bet rather than an immediate opportunity in El Salvador.
Although the sector's development has yet to take off, the country has already incorporated this technology into its energy planning. "Work is underway on the policy and roadmap for biogas, biomethane, and green hydrogen," explained Calderón Menéndez. However, a considerable gap still exists between planning and execution. Currently, there are no green hydrogen projects planned or publicly announced in the country.
Beyond institutional interests, the biggest problem remains financial. The experience recounted by Calderón Menéndez reflects a difficulty that still persists: producing green hydrogen remains expensive and difficult to justify from a business perspective.
“The numbers don’t add up in terms of profitability,” he stated regarding the stalled project. The consultant also explained that competitiveness will depend on structural improvements in both energy costs and technological efficiency.
“The cost of producing electricity from renewable sources (such as solar photovoltaic, wind, hydroelectric and high enthalpy geothermal) would have to be lowered, and hydrogen production would have to be optimized using higher-performance or lower-cost technologies,” he said.
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The challenge is significant. While various markets are moving forward with pilot programs and incentive schemes, in El Salvador there is still no formula that allows for transforming expectations into concrete investment.
Without regulation there is no market.
The other major outstanding condition is the regulatory framework.
Currently, El Salvador has legislation focused on renewable energy, but green hydrogen is not yet covered by its own rules for production, marketing, or incentives.
Therefore, Calderón Menéndez insisted that market development will depend on making rapid progress in establishing this regulatory framework. “The law that provides the regulations and standardization for how this product will be sold and marketed, and its incentives, would be paramount,” he stated.
As he explained, the country is evaluating mechanisms to attract private investment and create conditions similar to those already used for other emerging technology industries. But even with incentives, the market needs an additional condition: demand. The lack of projects also stems from the absence of a consolidated market capable of absorbing production.
To reverse this situation, he considered it essential to build a commercial scale. “To generate a national and Central American market for the use of this energy source,” he stated. The logic is clear: without buyers, there will hardly be any developers willing to take the risk.
El Salvador wants to participate in the new energy market promised by green hydrogen. But if the question is what's needed for it to take off, the answer still seems quite clear: regulation, demand, and profitability that will finally convince the market.