As a consequence of high GDP growth and an increase in industrial consumption of power, Uruguay’s energy demand is constantly on the rise. The country does not possess native fossil fuel resources and while it has a number of hydropower plants, these do no operate during dry periods, forcing the country to purchase electricity from Argentina at up to US$400/MWh.
In 2008, the Política Energética Uruguay 2030 was approved by the National Congress. It established a target of 15 per cent of electricity demand to be derived from renewable sources (wind, biomass and micro-hydro projects) by 2015. In 2013, this target was overhauled to an ambitious 90 per cent of total capacity being generated through renewables by the end of 2015. In June 2015, however, comments from Gonzalo Casaravilla, chairman of the state-owned electric utility UTE, indicated that this goalpost had been moved to the end of 2016.
Uruguay has vast wind resources and has been cited as the fastest-growing wind market in the world in 2014, according to the World Wind Energy Association. The country possesses 600MW of installed capacity and an additional 600MW under construction. Forecasts in the EY Renewable Energy Country Attractiveness Index indicate that Uruguay will be the global leader for wind energy as a proportion of the total energy mix, expected to reach 30 per cent by 2016, up from 13 per cent currently. UTE further announced a goal earlier this year to generate 38 per cent of its power from wind by the end of 2017.
Uruguay has brought in numerous overseas companies, such as Nordex and Gamesa, to develop wind through its auction process. Through the auctions, about 21 projects were awarded contracts in 2013 with guaranteed 20-year PPAs with state-owned electricity distribution companies. The approximate US$2 billion to be spent on wind farm installation is touted to be one of the largest investments in the country thus far. In March 2014 the financing for the 140MW Pampa wind farm was finalised, which is due to be operational in 2016 and will be the largest wind farm in Uruguay. Recently, in September 2015, Enel Green Power completed and commissioned the 50MW Melowind project, its first wind farm in Uruguay.
Biomass resources are currently the largest renewable source generating electricity, accounting for 13 per cent of generation in 2014. This source has further potential due to the strength of Uruguay’s agricultural, livestock and forestry industry. In this light, an environmental subsidy is being considered by Uruguay for the construction of an urban waste bio¬mass plant. A limited feed-in tariff for biomass, introduced in 2010, is currently being revised due to mixed results.
Furthermore, the country has sufficient solar radiation to develop solar PV and STE projects. UTE, who developed the ‘Plan Solar’ framework for developing these technologies alongside the Uruguayan government, has reported that the country’s PV generation increased from 362MWh in 2013 to 653MWh a year later.