Snapshot: The renewables, electrification push of Uruguay’s UTE

Uruguay’s state power company UTE has a 75MW solar project in the engineering phase, a plant being developed under the banner of its 2024-47 generation park expansion master plan.

Planned for Punta del Tigre, San José department and known as Melo, the project is one of three designed to meet a solar capacity growth target of 100MW-plus by 2026.

A 25MW plant – PTI A – entered service last month and another of the same capacity, known as PTI B, is in the tendering phase, UTE chair Silvia Emaldi told industry event Latam Renovables. Regarding PTI B, Emaldi said officials were analyzing bids, which are “quite competitive.” 

Under the 2024-47 plan, solar capacity is due to be expanded in blocks of 100MW. From 2032, 50MW blocks of wind power are envisioned, followed by 60MW gas capacity blocks to support grid stability. The idea is to eventually convert these thermoelectric plants to run on sustainable fuels, delegates heard at the event hosted by local renewables chamber Auder.

Reliant on imported hydrocarbons, Uruguay is working to increase electrification and decarbonization of the economy, a state-level push that includes boosting clean energy supply as well as investing in grid infrastructure and supporting development of a green hydrogen economy.

Last year, following regulatory changes, the first corporate power purchase agreement between private parties was announced in Uruguay. Under the agreement, beverage company Coca-Cola Femsa Uruguay obtains clean power from the 10MW Albisu plant in Salto department via a deal with global renewables generator Atlantica. 

Solar and wind projects led by the private sector are in the environmental review phase, with documentation for some citing green hydrogen producers as an offtake source. Many private projects envisage grid connection, which would bolster supply and permit excess to be sold to UTE, the event was told. 

Energy minister Elisa Facio referred to a recent rule change under which firm capacity provided by renewables is recognized in the national power network. “In this way, the possibility of creating a market of firm capacity is consolidated,” Facio said. “This market is not devoid of challenges, but the strategy is aligned, and the signals are clear.”

Holding a virtual power sector monopoly, UTE is carrying out a US$1.37bn 2020-24 investment plan. About 70% is earmarked for transmission and distribution and to date the company has spent US$1.19bn.

In January-July, Uruguay obtained 98% of its electricity from renewable sources, chiefly hydropower, wind and biomass.

According to Uruguay’s annual energy report, installed generation capacity in 2023 stood at 5.26GW, up 7%. Hydropower accounted for 29%, wind 29%, fossil fuels 22%, biomass 14% and solar 6%.

Electrification, decarbonization 

Uruguay is aiming for annual electricity demand growth of 3-4%, compared with typical rates of around 2%, the event heard.

This will create, particularly in Uruguay’s interior, demand for replacing aging grid infrastructure and building new grid components, participants were told.

Uruguay expects to end the year with around 10,000 electric vehicles in circulation, the events heard. Along with promoting adoption of electric light vehicles, Uruguay is replacing diesel buses with electric units and also eyeing green hydrogen usage in heavy transport, particularly in the forestry industry.

In terms of infrastructure, as of July UTE had 317 vehicle charging points, up from around 25 in 2018. By year-end, UTE expects to have 370 charging points. The proportion of rapid charging stations, standing at 109 in June, has been trending up.

In terms of modernization, Uruguay is rolling out a smart meter program. By year end, UTE expects all meters will be smart, up from a proportion of 88% in June, the equivalent of some 1.44mn units deployed.

“This generates important cost efficiencies and an improvement in the quality of service,” Emaldi said, citing the digital agility of the systems. Uruguay has reached near universal electricity coverage. 

In related news, Uruguayan transport operator Buquebus recently secured money to build the world’s largest electric ferry, connecting Buenos Aires with the port city of Colonia in Uruguay. Buquebus obtained a US$107mn loan from Santander Uruguay, which has an associated guarantee of US$67mn awarded by multilateral IFC. The outlay is for charging points and grid connection work, among other things.