Uruguay, pioneer in renewable energy: a model for the world? » Yale Climate Connections

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It has a population of just under 3.5 million inhabitants, produces nearly 550,000 tons of beef per year, and boasts a glorious soccer reputation with two World Cups in its history and a present full of world-class stars. Uruguay, the country of writer Mario Benedetti and soccer player Luis Suárez, has achieved what many countries have pledged for decades: 98% of its grid runs on green energy.

Luis Prats, 62, is a Uruguayan journalist and contributor to the Montevideo newspaper El País. He remembers that during his childhood, blackouts were common in Uruguay because there were major problems with energy generation.

“At that time, more than 50 years ago, electricity came from two small dams and from generation in a thermal plant,” Prats explained in Spanish by telephone. “If there was a drought in the Negro River basin, where those dams are, there were already cuts and sometimes restrictions on the use of electrical energy.”

Just 17 years ago, Uruguay used fossil fuels for a third of its energy generation, according to the World Resources Institute.

Today, only 2% of the electricity consumed in Uruguay is generated from fossil sources. The country’s thermal power plants rarely need to be activated, except when natural resources are insufficient.

Half of Uruguay’s electricity is generated in the country’s dams, and 10% percent comes from agricultural and industrial waste and the sun. But wind, at 38%, is the main protagonist of the revolution in the electrical grid. But how did the country achieve it? Who were the architects of this energy transition?

Energy revolution

In 2008, Uruguay faced a problem that many developing countries face. The economy was growing, but it did not have enough electrical energy to fuel all that growth. Energy rationing had to be implemented, and electricity bills continued to rise.

“It was difficult for us to cope,” Ramón Méndez Galain, a professor at the University of the Republic in Montevideo, Uruguay, said in an interview with NPR. He is one of the architects of the energy revolution in that country. “It was difficult to get electricity. For a while, we began to have power outages, but the crisis also represents an opportunity.”

In 2008, President Tabaré Vázquez appointed Méndez Galain as national director of energy. Although the blackouts posed an immediate threat to the economy, the country’s continued dependence on oil undermined its autonomy. A primary question guided Méndez Galain’s work: What strategies could lead the country toward long-term energy independence? The physicist developed a detailed plan to move Uruguay toward almost exclusive dependence on renewable energy.

Méndez Galain’s plan was based on two simple facts about his country. First, although there was no domestic supply of fossil fuels such as coal or oil, there was a large amount of wind. Second, that wind was blowing over a country that was largely made up of uninhabited agricultural land. His vision for Uruguay’s energy future was to cover those empty lands with hundreds of wind turbines.

Pablo Capurro, agronomist and livestock engineer, shared with Deutsche Welle his concern at the time about the possible impact of wind turbines on the life of his farm. Capurro and other farmers in the region sought advice from a team of engineers and took a trip to Brazil to visit wind farms in that country. After the trip, they were convinced that the implementation of the wind turbines would not affect the production system.

Capurro’s cows seem not to be affected by the presence of the windmills: “I feel very satisfied for having introduced a wind energy park on a livestock farm.”

In 2010, Uruguay reached a multiparty agreement and adopted the energy transition to indigenous and renewable sources as a state policy, guaranteeing its execution and continuity, Walter Verri, Uruguay’s undersecretary of industry, energy, and mining, explained by telephone in Spanish: “This policy included a long-term perspective and also incorporated the social, ethical, and cultural dimensions in addition to the classic technical-economic analysis of the energy issue.”

The state energy company, UTE, pays rent every year to the owners of the land where the wind farms operate.

Don Quixote, Ivy, and the windmills

In the vision of the ingenious gentleman Don Quixote of La Mancha, windmills stood like defiant giants, reflecting his boundless imagination and idealistic perspective on the world. This mythical interpretation of the windmills resonates with the contemporary perception of wind towers in Uruguay, where they are seen as symbols of a clean and renewable energy source.

Today, Mendez Galain directs the nongovernmental organization Ivy, which means “land without evil” in Guaraní. Guaraní is the native language of the inhabitants of that area and is one of the two official languages ​​of Paraguay.

Just as Don Quixote faced the windmills as a challenge that he had to overcome to fulfill his duty as a knight-errant, the installation and maintenance of wind farms in Uruguay also involved facing significant obstacles. From technical challenges to financial and regulatory barriers, the transition to clean energy sources needed a concerted effort to overcome these difficulties and move toward a more sustainable future.

How to pay for all those turbines?

Méndez Galain, winner of the 2023 Carnot Prize, which recognizes distinguished contributions to energy policy, conceived a variation of an approach used by some electric companies in Brazil. These companies operated through public-private partnerships, where the companies were responsible for energy generation, while private entities managed distribution and customer service. Méndez Galain’s innovation lay in reversing that dynamic: Private companies would be responsible for installing and maintaining the wind turbines that would supply Uruguay’s grid, while the public company would continue to distribute the energy to consumers.

This approach had the inherent advantage of transferring the costly initial outlay for the construction of wind turbines to private companies. The state company agreed to acquire all the energy produced by said turbines at a preestablished rate for 20 years.

“Investors need assurance that their investment will be repaid,” Méndez Galain explained during the interview with NPR, “and for that, they need a specific time horizon.”

There was political will for this approach: All parties in Uruguay agreed with the transition.

In 2009, Uruguay began auctions in which wind companies from around the world competed to offer the cheapest renewable energy to the country. In 2011, a specific auction aimed to secure an additional 150 megawatts of wind energy, which would represent approximately 5% of the country’s total power generation capacity. After receiving offers from more than 20 international companies, the professor and his team decided to drastically accelerate the country’s energy transition.

Ultimately, they accepted many more offers than initially planned, signing contracts that expanded Uruguay’s capacity to generate electricity not by 5%, but by more than 40%. Uruguay’s energy grid became powered almost exclusively by domestic renewable sources, and consumer prices, adjusted for inflation, fell.

“Electricity bill prices dropped substantially,” said Alda Novell, a resident of Montevideo, by telephone. Today, Uruguay has more than 700 wind turbines distributed throughout its territory.

“At first glance, the change is seen in many areas of the country: You go down the road and see the modern windmills in rural areas,” Prats said. “Starting in 2010, with the variety of energy sources, and also renewable ones, blackouts became very rare. It was a relief for state coffers not to have to spend on fossil fuels for energy generation.”

For Walter Verri, undersecretary of industry, energy, and mines, the development of renewable energy in Uruguay has been possible thanks to the collaboration of various actors, including the entire political sector and public and private companies.

This energy transformation created new careers, job opportunities, and training pathways in Uruguay, Verri added.

Countries around the world have spent the last decade announcing ambitious goals to reduce the emissions that cause climate change. Few are on track to achieve that goal. Uruguay is a good example that the green transition is still possible.

This article was translated by Climate Cardinals.