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Transforming the energy sector in Uruguay

Transforming the energy sector in Uruguay

Setting and achieving a target of 50% share of renewable sources in the primary energy matrix by 2015.
Themes
  • Energy
  • Waste Management
Location

Latin America and the Caribbean

Year Published

2005 - 2015

Case Summary
Before the implementation of the new energy policy, and despite not having oil, natural gas or coal reserves, Uruguay had a significant presence of fossil fuels in its energy matrix, amounting to 56% in the period 2001–2006 (Méndez, 2014). In 2005, renewable energy sources had a share of 37% in the energy supply matrix. This was as the country was using almost its total hydro power potential. Energy imports were concentrated on few suppliers, increasing energy security risks (Energy and Nuclear Technology Directorate, 2008). In addition, average economic growth rates of 5.2% per year in 2006–2014 (World Bank, 2015) led to a sharp increase in energy demand.  

To address this situation, an inter-ministerial coordination group was created in 2005 and, in 2008, the government approved a new Energy Policy 2005–2030, stipulating short-, medium- and long-term objectives for the sector.  

The short-term objective for 2015 is to reach a 50% share of local renewable sources in the primary energy matrix, resulting in a 90% share of power generation. This target is supported by a set of policies promoting the development of biofuels, solar and wind as well as the elaboration of innovative promotion schemes that grant industries up to 80% tax reductions on investments in RE generation.  

The implementation of the policies resulted in significant investments in renewable energy installations, initiating a transformation of the energy sector. To date, this policy has achieved annual GHG emission reductions of approximately 5 million tonnes CO 2 eq.
Collaborators
  • The Ministry of Industry, Energy and Mines, specifically the Energy and Nuclear Technology Directorate leads the process.
  • The Ministry of Housing, Land Planning and Environment (MVOTMA), through its Climate Change Unit, complements and coordinates the effort.
Other relevant institutions involved are:
  • Ministry of Foreign Affairs
  • Ministry of Economy and Finances
  • Ministry of National Defence
  • Ministry of Livestock, Agriculture and Fishery
  • Ministry of Health
  • Ministry of Sports and Tourism
  • Budgeting and Planning Office
  • National Emergencies System
  • National Mayors’ Congress
Cooperation with
In addition to all the ministries that participate in the inter-ministerial coordination group mentioned above, the two national energy companies, UTE in the electricity sector, and ANCAP for fuels, have also been key for the good implementation of the energy policy (Mendez, 2013a).
Finance
Investments in renewable energy: In the period 2010-2013, investments in renewable energies amounted to more than US$7 billion, mainly placed by public-private associations (Mendez, 2013). In 2013 alone, tenders attracted US$1.3 billion in clean energy investments, mostly coming from multilateral and export-import institutions (Bloomberg New Energy Finance, 2014).  

Each year, more than 3% of the national GDP is reinvested in infrastructure for the transformation of the energy matrix (one third from fiscal resources and two thirds from public private partnerships).

Results supported byUNDPWorld Resources InstituteTransparency partnership