According to Uruguay’s national director of energy, Ramón Méndez, in less than just one decade, the tiny South American country has dramatically reduced its carbon footprint without using government subsidies or implementing higher consumer costs.
In fact, he proudly points out that renewable energy now provides 94.5% of the country’s electricity. There are also fewer power outages because a wide range of energy sources means the country has a greater resilience to droughts.
Just 15 years ago, the story was quite different. In the late ‘90s, oil accounted for 27% of Uruguay’s imports. Moreover, a new gas pipeline was about to begin supplying the natural resource from Argentina.
Now, Uruguay is recognized for its progress on reducing its carbon footprint. Just last year, the World Wildlife Fund named Uruguay one of its “Green Energy Leaders,” proclaiming that, “The country is defining global trends in renewable energy investment.”
Mendez claims the country’s key to success is not very interesting but that it can be replicated: “clear decision-making, a supportive regulatory environment and a strong partnership between the public and private sector.”
Mendez points out that, “What we’ve learned is that renewables is just a financial business. The construction and maintenance costs are low, so as long as you give investors a secure environment, it is a very attractive.”
Along with reliable wind, the major attraction for foreign investors like the Enercon company is a 20 year fixed-price guaranteed by the state utility. Since maintenance costs are very low and stable, a profit is guaranteed.
As a result, foreign investment firms are getting in line to secure windfarm contracts. The robust competition is pushing down bids, thereby reducing electricity generating costs by about 30% over the last three years.
Mendez says that, “For three years we haven’t imported a single kilowatt hour. We used to be reliant on electricity imports from Argentina, but now we export to them. Last summer, we sold a third of our power generation to them.”
Méndez notes that there is still a lot to do, but attributed Uruguay’s present success to three key factors: credibility (a stable democratic country that has never defaulted on its debts); good natural conditions (decent wind, good solar radiation and lots of agricultural biomass); and strong public companies.
Mendez stated that it was not always easy. “We had to go through a crisis to reach this point. We spent 15 years in a bad place. But in 2008, we launched a long-term energy policy that covered everything … Finally we had clarity.”
That new direction has allowed the tiny country to reap major rewards.