Uruguay, Pioneer of Renewable Energy in Latin America
Uruguay, a small nation in South America, has become a global leader in renewable energy production, thanks to a series of bold decisions made under the leadership of former President Jose Mujica.
Twenty years ago, large bulks of electricity were imported from neighbouring Argentina. Fast forward to today, and Uruguay is now producing 36 percent of its energy from wind and solar energy, placing it in fourth place globally, according to the International Energy Agency (IEA). This remarkable shift began under Mujica's administration, which initiated a policy that provided a fixed twenty-year feed-in tariff guaranteed by the public utility, contributing to a flourishing investment climate.
The policy has triggered over $7 billion US dollars in investments in Uruguay's renewable energy sector. By 2016, a year after Mujica's reign, wind farms across the country had lowered energy generation costs by more than $200 million US dollars annually. This change has visibly benefited both the economy and society as a whole in Uruguay.
Including hydropower, Uruguay now produces more than 97 percent of its energy from renewable energy sources. This shift has allowed the country to reduce its greenhouse gas emissions by 88 percent by 2017 compared to the 2009-2013 average. Moreover, it has made Uruguay's energy sector more resilient to a changing climate, as the diverse energy generation due to the shift to renewables has provided a buffer against weather uncertainties.
The success story in Uruguay demonstrates that it is possible to diversify and base large parts of energy generation on wind and solar without a dirty energy back-up in a relatively short time. Uruguay can spare its water resources for rare times when the wind is not blowing, helping to reduce droughts by up to 70 percent.
The strong partnership between the public and private sector played a significant role in the success of Uruguay's renewable energy initiatives. The decision to rely on renewable energies was made to reduce energy costs, and the policy is now responsible for more than 15 percent of Uruguay's GDP.
Uruguay's success has not gone unnoticed. Countries like Brazil, Argentina, and Paraguay within the Mercosur trade bloc are showing interest in following Uruguay's example of transparent and stable renewable energy regulation, supported by ongoing EU trade agreements aimed at enhancing cooperation in sectors including renewable energies. However, Uruguay remains uniquely recognized for its advanced regulatory framework and high renewable energy share in South America.
Countries like Denmark, Lithuania, Luxemburg, and Uruguay are setting examples for the world, demonstrating that a shift to renewable energy can be both economically beneficial and environmentally sustainable. The Mujica way offers a lesson for South American renewable expansion: it will succeed through transparent decision-making and a stable regulatory environment.
