Renewable energy sources play an increasingly important role in discussions about the future of Uruguay’s energy matrix. The country needs to strengthen its energy security in order to avoid recurring energy crises and its 100 percent dependence on imported oil. Although import statistics are not impressive, since the country has not imported much renewable energy equipment until now, the projects in the pipeline justify paying attention to the local market. Attempts by the Government of Uruguay (GOU) to promote greater energy efficiency and production from renewable sources are favorable and will create greater energy independence for Uruguay, while also providing new market opportunities. UTE (the national electricity utility, the only operator in transmission and distribution) is working to diversify Uruguay's grid, and the wind-power expansion stems from this effort. Private companies have been awarded contracts for research and development of both wind and solar capture technologies, and laws have been drafted by the government to incentivize and regulate use of alternative energy sources.
In recent years, the need for Uruguay to expand and diversify its national energy portfolio was brought into sharp focus by the country’s worst ever energy crisis. Under optimum conditions, up to 70 percent of the country’s annual electrical energy requirement of 2500 megawatts (MW) is generated by large scale domestic hydroelectric power plants, with the remaining 30 percent being met mainly by oil, along with a small amount of gas and imported electricity. In recent years, however, the average hydroelectric power has not reached 60 percent of national demand. A rising demand and limited rainfall have forced Uruguay to supplement its electricity supplies from its neighbors Argentina and Brazil.
A driving force behind the diversification of Uruguay's energy sector is a desire for energy security and independence. The GOU also has a long-term social goal that it would like to meet by covering basic energy requirements in terms of both quantity and quality for the entire population of 3.3 million. The potential to harness wind energy in Uruguay is significant. UTE has current wind projects underway that will generate almost 1000 MW. In 2005 the government established plans to include incentives for buildings and homes to use mini-wind parks to create self-sustaining energy. This initiative has the ability to significantly reduce domestic energy consumption. Adequate sites for wind energy in the country have exceeded expectations. The government also designed a wind map available on-line at http://www.energiaeolica.gub.uy/index.php?page=mapaeos. Average wind profile measures at heights of 90m show speeds of 6 to 9 m/second. Original estimates in 2009 showed that the country could install between 300 to 500MW of wind energy by 2014 but the current figures show up to 1000MW.
UTE is the only operator in transmission and distribution of electricity, but generation can be undertaken by the private sector as well. Wind energy regulations (technical and environmental) are applied to all operators. The legal framework includes laws and decrees, some are general for all electric energy generators and others are specific to wind energy and/or renewable resources.
Currently, the Directorate of Energy has to authorize the installation of power projects above 10 MW. The Ministry of Environment will also check the environmental impacts of the project in accordance with prevailing environmental law.
The goals set by the government are ambitious, including a 15% increase in renewable energy generation by 2014. To supplement this, the Uruguayan power company UTE signed an agreement in 2012 with Electrobras (Brazil) aimed at the joint construction of a 100MW wind farm near the Brazilian border. UTE is also exploring by itself possibilities for another farm of 70MW that could grow to 270MW within two years. In September 2008, the United States and Uruguay signed a Renewable Energy and Energy Efficiency Memorandum of Understanding (MOU).