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Uruguay Takes Strides in Energy Transformation

Uruguay renewable energy
The latest statistics released by the Uruguayan Electricity Market Management Authority show that the country's renewable energy production in 2023 has reached expectations, with renewable energy accounting for 88.5% of the total electricity generation. In recent years, Uruguay has made significant progress in the development of renewable energy, with wind power accounting for approximately 40% of total electricity generation, and the electricity generation from biomass, solar, and other renewable sources continuously increasing.

In the 20th century, Uruguay heavily relied on fossil fuels for electricity generation, and the cost of importing fossil fuels once reached 2% of the country’s gross domestic product. To achieve energy transition and ensure a long-term stable power supply, the Uruguayan government began studying improvements to the energy structure in 2005 and passed the “2005-2030 Energy Development Plan.” The plan formulated a series of investment stimulation policies in the renewable energy sector, encouraging private and foreign investors to actively participate in the country’s renewable energy market. By signing 20-year contracts with project developers, guaranteeing the national grid’s purchase of electricity at fixed prices, Uruguay attracted approximately $6 billion in investment in the renewable energy sector within five years. In addition, the development of renewable energy also led to a nearly 50% reduction in Uruguay’s electricity production costs and created 50,000 jobs. Ramón Méndez, a former official of the Uruguayan Ministry of Industry, Energy, and Mining, said, “The transition to renewable energy is not only to achieve climate goals but also because it is most beneficial for our country.”

The Uruguayan government also focuses on developing solar power generation, providing incentives for investment in the industry through legislation. It encourages the development of solar power in rural areas, especially in public places such as rural schools and hospitals that are far from the grid. In the transportation sector, the Uruguayan government has also implemented a series of incentive programs, including encouraging businesses to use electric vehicles, increasing the number of domestic electric taxis and electric buses, and providing tax incentives for the import of electric vehicles, renewable energy generators, and related equipment.

Currently, Uruguay has begun the second phase of promoting energy transition, and one of its main goals is to vigorously develop the green hydrogen industry. According to the Uruguayan government’s estimate, the green hydrogen industry can create a potential annual revenue of $1.9 billion for the country by 2040. In 2021, the Uruguayan Ministry of Industry, Energy, and Mining, along with the National Oil and Gas Company and the National Power Company, jointly formulated the “National Green Hydrogen Energy Strategy,” considering green hydrogen energy as a crucial part of the overall sustainable development plan. The government is committed to improving regulatory mechanisms, simplifying approval processes, and formulating attractive incentives. In 2022, Uruguay introduced the Green Hydrogen Energy Development Roadmap, allocating $10 million to fund R&D pilot projects in the green hydrogen energy sector.

Omar Paganini

In recent years, Uruguay and China have continuously strengthened their cooperation in the field of renewable energy. The Uruguay 500 kV Transmission and Transformation Ring Closure Project, undertaken by China National Building Material Group Corporation(CNBM), is currently under construction. Once completed, this project will help Uruguay build a more resilient national transmission network and promote clean electricity as a “distributable and transportable energy.” “Uruguay is willing to cooperate with China in investment, technology, and trade in the field of renewable energy, jointly promoting global decarbonization,” said Uruguayan Foreign Minister Omar Paganini, expressing the common vision and collaboration potential in sustainable development between Uruguay and China.

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