Solar Project Causes Social and Environmental Conflict in Rural El Salvador

Salvadoran farmer Damian Cordoba looks at the trunk of what was once a fire tree, one of many that have been felled to make way for solar panels to be installed on a farm in western El Salvador by Volcano Energy to provide cheap energy for bitcoin mining. Credit: Edgardo Ayala / IPS

By Edgardo Ayala
IZALCO, El Salvador, Nov 28 2024 (IPS)

With machete in hand, Salvadoran farmer Damián Córdoba weeds the undergrowth covering the trunk of what was once a leafy tree to show the deforestation taking place on the Santa Adelaida farm, where a company seeks to install a solar park in western El Salvador.

“The people hired by the company... said they were going to cut down some trees to plant coffee and fruit trees, but that was a lie, because later they revealed they were for solar panels”: Damián Córdoba.
The 115-hectare farm intersects with the territories of several hamlets, whose approximately 10,000 families will be affected by the deforestation required to install the photovoltaic power station, which is being built by Volcano Energy, a private initiative whose trading company is named Hashpower Energy Solutions.

The recently formed Volcano Energy wants to generate cheap electricity that will be used to mine bitcoins, taking advantage of the enthusiasm the government of El Salvador continues to show for this cryptocurrency, legal tender in this Central American nation since September 2021.

“The people hired by the company to cut down the trees said they were going to cut down some to plant coffee and fruit trees, but that was a lie, because later they revealed they were for solar panels,” Córdoba told IPS, as he continued to cut down the undergrowth covering the trunk of what was once a fire tree (Delonix regia), more than a metre in diameter.

Córdoba is a native of the Chorro Arriba canton, one of the three peasant communities that will be most affected by the photovoltaic project, along with Cuntán and Cuyagualo, all three of which belong to the Izalco district.

Forced displacement

Most of these families live on plots of land they own, bordering the Santa Adelaida estate, but their ancestors settled there as labourers or settlers decades ago, with the permission of the landowners, in exchange for work on agricultural tasks for a meagre wage.

Over time, the descendants managed to buy the plots and thus have their own place to live.

However, there are 13 families still living on the Santa Adelaida farm as settlers who are about to be evicted from the property, villagers said. IPS saw how the cottage of one of these workers had already been demolished.

“This logging carried out by Volcano Energy is the final blow, the death blow to the farm,” said Córdoba, referring to prolonged process of indiscriminate logging the estate has been subject to since it was bought some 25 years ago by a member of the Saca family, one of the most prominent in the country.

This family includes former Salvadoran president Elías Antonio Saca (2004-2009), who since 2018 has been serving a 10-year prison sentence for corruption.

The farm was reportedly sold months ago to Volcano Energy, although details of the transaction are unknown, said residents of the hamlets.

This new wave of deforestation, to set up the solar park, began in January, said Córdoba, as he continues to walk through the undergrowth of the cleared land, except for a dozen timber trees, still standing but marked with light blue dots, confirming that they will be felled.

Some of the 115 hectares of the estate has already been felled, at the hands of the former owner, the Saca family. But the solar project has begun to clear what is still standing, and is looking to acquire more property, say villagers, who estimate 350 hectares could be affected in all.

In June, the solar project was announced by company representatives at a general meeting with residents, said Córdoba, 40.

He added that at the meeting Volcano Energy officials did not confirm the project would be for mining bitcoins, but rather “for data processing”, although in reality mining bitcoins is just that: the execution of highly complex mathematical operations that must be solved by powerful computers to “find” or validate a bitcoin in this ecosystem.

On its website, Volcano Energy presents itself as “a renewable energy and bitcoin mining company propelling El Salvador toward energy independence and financial sovereignty”, whose mission is “to lead the sustainable bitcoin revolution in El Salvador”.

Social and environmental impact

Farming families in the area told IPS they will be affected by the environmental impact of cutting down the few remaining areas of trees on the property, especially because of the potential water shortages it will cause.

“We all know that the fewer trees we have, the less water there will be,” farmer Arístides Ramón Munto, 70, told IPS, sitting inside his house, shirtless, to get a breath of fresh air.

Then the farmer put on a shirt to pose for an IPS photograph with his mother, Macaria Rufina Munto, 85, who was preparing the wood-burning cooker to “throw” corn tortillas (flat, round breads) on a circular clay griddle, called comal in Central America.

“We don’t want them to throw away the sticks (trees), because where will the wild animals live?” the mother wondered, waiting for the comal to heat up to make the tortillas.

On 22 August, a group of villagers wrote a letter to the Minister of Environment and Natural Resources, Fernando López, warning they were “full of concern about the environmental problems that are looming in our community” due to the imminent arrival of the solar project.

The project “will hinder the connectivity of the ecosystem, especially for species of wild mammals in a delicate state of conservation, such as agouti, lowland paca, panther and margay”, among others.

The inhabitants also reminded the minister the area is a harvesting and exploitation zone for water for human use, and it feeds the Cuntán river, which at one point has a small dam that supplies water to the port city of Acajutla, to the south.

The signatories of the letter reminded the minister that the area is part of the Apaneca Ilamatepec mountain range, an extension of 59,000 hectares of forest and coffee plantations, certified as a biosphere reserve by Unesco in 2007, and as such, business initiatives should not be allowed there, especially if they involve cutting down trees.

On 24 October, those affected sent a formal complaint to the General Board of Forestry, Watershed and Irrigation Management of the Ministry of Agriculture and Livestock. In accordance with article 152 of the Law of Administrative Procedures, they requested that precautionary measures be taken, i.e., that the project be suspended while an environmental court resolves the case.

Cheap electricity for bitcoiners

The socio-environmental conflict at the Santa Adelaida farm has emerged within the context of the Salvadoran government’s serious commitment to clean energy, not only because of its interest in lowering electricity costs.

Clean energy is also being encouraged by what seems to be an obsession with bitcoins by the Salvadoran president, the neo-populist and right-wing Nayib Bukele, in power since 2019 and who, since 2021, has been promoting one of his most unusual projects: the first farm to mine this crypto-asset in the country.

It is known that the mining process uses a huge amount of electricity to operate the computer network, and the cheaper it is, the lower the operating costs of the farms. Hence the interest in finding energy at low-cost.

In May, Diario El Salvador daily, funded by the Salvadoran government, reported that Bukele’s effort had paid off, as some 473 bitcoins had been mined from the farm installed at the Berlin geothermal power plant, a state-owned plant located in the eastern department of Usulután.

These crypto assets represent some US$44 million, at bitcoin’s current price of US$93,236 per unit.

This initial effort has apparently led to Volcano Energy, founded by Max Keiser, President Bukele’s advisor on bitcoin, and US-based Luxor Technologies, which are said to have formed Hashpower Energy Solutions, although everything is shrouded in government secrecy.

The Berlin plant is supposed to have 300 computer systems already in place to solve the intricate mathematical operations involved in finding bitcoins, but the independent press has not had access to the facility to verify this.

Although it is not clear how, due to official secrecy, the Salvadoran government is also linked to Volcano Energy, offering it all the conditions to set up and operate its solar project in the country, using the clean and cheap energy that the company intends to obtain from various sources, including the solar power station it wants to set up on the Santa Adelaida estate.

In return, in this sort of public-private partnership, the Salvadoran government will receive 23% of the total income of Volcano Energy, which plans to start operations in 2025, said Josué López, the company’s general manager, to Diario El Salvador in April.

Lopez said that, at first, the farm will run on solar and wind power, generating around 130 megawatts in all, but that in the medium term they will build their own geothermal station. Although he did not say it, it is understood they will use the state-owned infrastructure of the geothermal plant in Berlin.

Meanwhile, on 15 October, the foreign investment office for El Salvador announced that the Salvadoran government has approved 21 new photovoltaic projects.

These new initiatives join the more than 250 solar projects already operating in the country, according to Oscar Funes, vice-president of the Salvadoran Association of Renewable Energies, formed by companies working in the sector.

Funes told IPS that Volcano Energy does not belong to the association and that, although he has been working in the energy sector for three decades, he only found out about Hashpower Energy Solutions, the company understood to be behind it, when the media reported on the conflict at the Santa Adelaida farm.

When Córdoba, the farmer who walks the cleared plots, machete in hand, read the news on the internet about the 21 new solar projects approved, he said: “That’s probably why they are interested in grabbing more property here, close to our communities”.