Snapshot: The views of Uruguay’s leading presidential candidates on energy

Energy transition is poised to remain a chief pillar of state policy in Uruguay, no matter which of today’s two leading candidates becomes the next president.

Uruguay, reliant on imported oil and gas, is working to boost electrification and build a green hydrogen economy.

Center-left opposition candidate Yamandú Orsi, a former Canelones department governor, and center-right Álvaro Delgado, who served as secretary of the presidency until December, are the frontrunners in the race to take the baton from President Luis Lacalle Pou. 

Uruguayans head to the polls in October after last voting for a new head of state in 2019. 

Renewables

Marcelo Mula, president of Uruguayan renewables association Auder, summed things up during a recent energy conference, prior to introducing Delgado and Orsi. 

“Beyond changes in governments, beyond the fact that there could be some minor differences in these areas – this always happens – energy policy in Uruguay is state policy and have no doubt that this will present a wealth of opportunities,” Mula said.

In 2010, a cross-party agreement on energy transition was reached, an accord that Delgado wants to update to help spur the private sector’s footprint in the power generation sector, today dominated by state utility UTE.

The 2010 agreement, which drove the first phase of Uruguay’s energy transition – chiefly a wind capacity buildout – is associated with public and private investment of US$8bn.

Today Uruguay, a small but stable investment destination, obtains around 98% of its power from renewable sources, making the country a leader on the world stage. Compared with South American neighbors Argentina, Brazil, Chile and Paraguay, Uruguay has the highest prices per MWh for residential supply and medium-voltage industrial supply, according to a July report from local energy consultancy SEG Ingeniería.

Last year, meanwhile, wholesale power market regulations were modified to recognize a part of the firm capacity of wind and solar parks, opening the door for power purchase agreements (PPAs) between private players. A pioneering solar PPA was signed, and projects have entered the environmental review phase. 

Nevertheless, the capacity entry bar to the nonregulated market was raised to 1,500kW from 200kW, limiting the field of potential participants to large industrial consumers.

Second-phase energy transition work focuses on efficiency, electromobility and green hydrogen and its derivatives. Uruguay is concentrating heavily on the latter two areas.

Delgado

“The most important thing is that Uruguay is in the world vanguard,” Delgado said, adding that if elected he would seek a 2050 multi-party agreement.  

“Private generators need certainty, clear rules of the game concerning what the government will do, the role of UTE as enabler and not a brake, the possibility of generating the necessary interchanges,” he said, adding that the country needs to supply investors with the clean power they demand for their production facilities. 

Spurring private PPAs and the spot market, along with smart grid, energy storage and biomass-generation investment, are other pending tasks, along with working on energy rates and green hydrogen regulation, he said.

In terms of electromobility, where incentives were outlined, “obviously we definitely have to set goals here, two-thirds of fossil fuels in Uruguay are consumed by transport,” he said.

Green hydrogen and its derivatives, especially synthetic liquid fuels, are an “enormous opportunity” for Uruguay, he said. 

ALSO READ: The renewables, electrification push of Uruguay’s UTE
ALSO READ: Uruguay clean energy projects seeking environmental green light

The country has several hydrogen projects in the development phase and a sector roadmap. In terms of domestic oil and gas production, Uruguay has none but awarded all seven offshore hydrocarbons blocks up for grabs in an exploration licensing round.

Orsi

Orsi, meanwhile, stressed the importance to Uruguay's energy transition of policy continuity through political cycles.

“As was said here, and I repeat it, this is possible as long as there is a state policy,” said the candidate, who has a comfortable lead in opinion polls. 

“We will never abandon, never, ever, the path of development of renewable energy, rather revitalize it, deepen it, but never stop it.” 

Celebrating past and future cross-party accords, he also referred to Uruguay’s dependence on imported oil and gas, the latter fuel transported into the country via two pipelines from Argentina. 

Alluding to synthetic fuels, he said: “As we generate our own exit ramps, evidently, we’re brightening the outlook for the country’s destiny.”

Regarding the relationship between UTE and state hydrocarbons firm Ancap, both of which are expected to play a role in a future sustainable fuels market, he said: “I think the future will see a new institutional design, I don’t know when, where the fuel company and the electricity company will have a much more fluid link because the circumstances demand it.” 

Vote

Around 2.77mn Uruguayans are due to choose their next president on October 27. Voting is mandatory and incumbents cannot run for a second consecutive term.

To win in the first round, a candidate needs to secure 50% plus one vote. If no candidate achieves that, a runoff will be held on November 24.

ALSO READ: Uruguay's leftist coalition eyeing return to power in October

Orsi represents the Frente Amplio coalition and Delgado (National Party) the ruling Republicana coalition.

Of the other candidates, the contender with the biggest share of voter preferences is Andrés Ojeda of ruling coalition member Colorado Party.