This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 1/9/2020

Overview
An absence of tapped fossil fuel resources has made Uruguay historically dependent on hydroelectric power, imported oil, and imported electricity from its neighbors Argentina and Brazil. 

In the last 10 years, Uruguay has shifted dramatically to electricity generated from renewable sources and shifted away from petroleum-based generation.  Currently 98 to 100 percent of electricity comes from renewable sources compared to just 40 percent as recently as 2012.   

Uruguay often has surplus electricity supply, due to an excess of wind-power generating capacity.  Uruguay is seeking to identify additional domestic uses for the excess and/or increasing exports to Argentina and Brazil.  In 2018, Uruguay exported 85 million USD in electricity, to Brazil and Argentina.  Uruguay has become one of the leading countries in renewable energy generation, primarily from hydro (60 percent), with the remainder from wind, solar, and biofuels.  Uruguay is also one of the most electrified countries in the hemisphere, with 99.4 percent of homes receiving electricity.  The government’s objective is to reach 100 percent by 2030. 

Hydroelectric capacity is 1,500 megawatts (MW) and is unlikely to grow, given that the country is already exploiting all its large-scale hydro resources.  Uruguay also has more than 1,500 MW of installed wind capacity, which is expected to continue to slowly increase.  Uruguay is already using wind energy for base power and hydroelectric to meet peak demand.  The government is also strongly encouraging the production of hydrogen, bio-diesel and ethanol in addition to its focus on wind, biomass, and solar energy.

Leading Sub-Sectors
Biomass
Although forestry is the main source of biomass, Uruguay has other sources available from the beef industry and edible oil.  Investments in biomass increased considerably in 2013, when it reached more than 400 MW of installed power generation and has not increased considerably since then.  In 2018 biomass represented 7 percent of the total amount of electrical generation, behind hydro and wind. 

Wind
In 2018, 36 percent of electricity supply was from wind power.  The potential to harness wind energy in Uruguay is significant.  Average wind profile measures at heights of 90 meters show speeds of 6 to 9 meters/second.  Development of wind energy has exceeded expectations and the country currently has a surplus of wind generation capacity.  The government designed a wind map, which is available online at  Wind Map.  Further information is available (in Spanish) at http://www.energiaeolica.gub.uy.

Solar
The potential for solar power in Uruguay is encouraging; Uruguay receives an average of 1,700 KW per square meter of sunlight a year, on a par with Mediterranean countries.  Two percent of total energy production comes  from this source.  Legislative support for solar power has existed since 2013.  Benefits are also available under the Investment Promotion Law that offers incentives for investing in manufacturing, implementing, and utilizing solar energy.  There is a strong emphasis on local production, and the priorities for solar energy include rural areas—particularly rural schools far from the grid, hospitals, hotels, sports clubs, and new public buildings. 

For Uruguay’s solar map see:   http://snip.state.gov/itr.  Information on the government’s solar plan is available (in Spanish) at http://www.energiasolar.gub.uy/

Hydrogen
Uruguay’s Ministry of Industry, Energy and Mining (MIEM), the state oil and gas company (ANCAP) and the state electricity company (UTE) are working towards the implementation of a pilot project for green hydrogen production by electrolysis.  The main objective in the long term is to decarbonize the Uruguayan transport system. To reach this objective, the government needs to generate hydrogen long-distance vehicles, such as coach buses and heavy-duty road trucks.

Opportunities
Uruguay has nearly completed all its current renewable infrastructure projects, with an installed capacity of 4,600 MW.  Further investments in power capacity will be linked to increases in electricity demand, which the government estimates to be two percent annually.  As government policies continue to promote greater energy independence and improved efficiency from renewable sources, we expect a favorable market for new opportunities, but not on further capacity.  Opportunities are present in green technology, energy storage, smart grids, electric transportation, and the development of more energy-efficient transmission lines.
According to the Ministry of Industry, the excess of energy generated in Uruguay can be used for electric-powered transportation.  The government generated incentives for companies to transition vehicle fleets to electric and has already implemented tax benefits to those companies that purchase them.  Electric vehicles can already be imported into Uruguay, duty free, with tax exemptions.  Uruguay's government-owned power company UTE debuted in December 2017 with the creation of the first electric-vehicle route in Latin America, which connects east-west and south-north of the country.  This route provides a network of charging stations distributed at approximately 60 kilometer intervals. UTE said the next phase is to have charging stations throughout the country, with at least one station in each department.

Companies also do not pay import duties on renewable-energy generators and equipment (if classified as capital goods).  For conventional equipment, a 14 percent duty is applied to products that are not from the MERCOSUR countries.   
U.S.-manufactured products are regarded as high in quality but occasionally lose in price competitiveness.  U.S. products may also rate poorly when it comes to financing, an important factor in sales in Uruguay.  U.S. manufacturers offering flexible, innovative, and competitive credit terms will have an advantage.

Web Resources

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