Uruguay has made significant strides in power generation and environmental technology, establishing itself as a leader in renewable energy within Latin America. The country’s strategic focus on sustainability has led to significant investments in wind, solar, and biomass energy, positioning it as a global model for renewable energy adoption.
Uruguay’s regulatory framework, including the 2008 Energy Policy and the National Energy Strategy 2030, provides a roadmap for the country''s sustainable energy development. These policies emphasize renewable energy adoption, energy efficiency, and technological innovation. Uruguay collaborates with international organizations and countries to share knowledge and attract investment. Partnerships with entities like the International Renewable Energy Agency (IRENA) and bilateral agreements with countries such as Germany and Japan facilitate technology transfer and capacity building.
Although current renewable energy generation is sufficient to meet the country’s current electricity demand, Uruguay continues investing in power generation to cover expected increases in future electricity demand. There are also investment plans to support projects related to green hydrogen production. Notable power generation projects include the H2U Offshore Wind Farm, ANCAP''s (National Administration of Fuels, Alcohols and Portland) green hydrogen and eFuels plant, private green hydrogen and transportation projects and the renovation of the Salto Grande hydroelectric plant.
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Uruguay''s power sector is dominated by renewables. In 2020, renewables accounted for 94% of generation, reaching up to 98%. Hydropower is a significant source of electricity, with wind power growing significantly over the past 15 years. Uruguay began renewable energy auctions in 2006 and has increased the renewable energy share of the electricity mix by 93% since signing the Kyoto Protocol. [1]
Endorsement by all political parties in Congress indicates high political will as a key enabling factor. This was driven by concerns about energy sovereignty as Uruguay was highly dependent on energy imports from Argentina and economic growth had driven a sharp increase in energy demand with little capacity additions.
Establishment of the National Energy Policy set renewable energy targets and empowered the Ministry for Industry, Energy, and Mines and the national energy producer to develop further policy to support development of renewable infrastructure and renewable feed-in to the grid.
The National Energy Policy 2005-2030 is the key long term strategy document for the Uruguayan power sector. It outlines a comprehensive and long term strategy which combines institutional reform with target-setting and infrastructure investment across the energy sector [6]. The Policy sets short-, medium-, and long-term targets and introduces several financial mechanisms to increase investment in renewable energy. [2]
Investments in renewable infrastructure have increased significantly, with more than 3% of GDP invested in energy infrastructure from 2008 to 2021. In 2015, renewables accounted for 55% of the energy supply — accounting for a 5.2 MtCO2/year reduction in emissions since the policy came into force in 2008. The energy mix has diversified and Uruguay has achieved energy security and is no longer reliant on energy imports.[2]
This policy is the foundational decree which allows the national energy provider to set competitive auctions and enter into energy contracts with renewable energy generators. It is a prerequisite for further competitive development of wind infrastructure in Uruguay. [5]
Decree No. 403/009 auctioned 150 MW for wind power, as well as an additional 150 MW to reach National Energy Policy targets for 2015 [8]. It sets guidelines for contracting and auctions developed by the national electricity utility (UTE). The call was open to wind farms from 30 to 50 MW with power purchase agreements of 20 years. It was followed in 2011 by Decree 159/011 which auctioned the second phase. [1]
Decree No. 567/009 establishes rules for feed-in of electricity from wind generation. It establishes electricity from wind as having zero marginal cost and that they will therefore be dispatched when available [9].
Decrees No. 158/012 and 433/012 established an auction for 200 MW of wind generation for self consumption by industry and set a power purchase agreement for feed-in of excess generation. It allows for on and off-site generation and for multiple industry actors to join together on a single generation project [10].
This policy generated huge investment in wind power and other renewable energy projects, leading to the development of a significant amount of wind and solar capacity which generate cheaper electricity than other sources. The long-term vision of the policy ensures that these technologies remain the preference with a high proportion of renewable generation locked in.
This decree enables the national electricity utility (UTE) to establish power purchase agreements and de-risk investments in wind, setting an institutional framework which prioritises wind development.
This policy auctioned 20-year power purchase agreement contracts and established the guidelines for execution of further contracts, locking in wind generation and reducing barriers to future auctions.
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