Uruguay: A country almost entirely independent of oil and gas

In 2008, this South American country with a population of 3.5 million was in the throes of an energy crisis. Today, Uruguay is regarded as a climate champion. How did the country achieve its energy transition – and would this approach work for other countries too? By Anne Herrberg Travelling along Ruta 5 in Uruguay, the national road that crosses the entire country. 500 kilometres from Montevideo to the Brazilian border – to the left and right of the road: fields, cows, few houses, but time and again: wind turbines. Many of them belong to Fernando Schaich: “Here, on this map, you can see what Uruguay used to look like – those individual red dots there,” he says. “In 2010, there was the odd hydroelectric power station here and there, and a small, experimental wind turbine.” He jumps to the year 2026 on the virtual map – Uruguay looks as if it’s been struck by measles, with red dots everywhere. Schaich and his company, SEG Ingeniería, alone operate 75 wind turbines, accounting for ten per cent of the country’s total installed capacity. Uruguay’s electricity mix today consists of 50 per cent hydroelectric power, 30 per cent wind energy, 15 per cent biomass and three per cent solar energy. Schaich says: “Today’s electricity mix is practically green – on average over recent years, the share of fossil fuels in electricity generation has been just two per cent. And that’s not just a question of sustainability, but of economic viability.” One man, one vision In 2008, Uruguay was in the throes of an energy crisis: extremely high prices coupled with a severe drought pushed the system to its limits, leading to repeated power cuts. That was the starting point for a change in thinking: today, this South American nation of 3.5 million inhabitants has become a climate champion. And it has achieved this despite having to manage without substantial financial reserves or high-tech infrastructure. The visionary behind this transformation is the physicist Ramón Mendez. “What was novel in Uruguay’s case – and this is something that can definitely be replicated – is the way in which we envisage an energy transition,” he says. “It’s not about making minor adjustments; you have to fundamentally transform the system.” He took up the post of National Energy Director. He succeeded in bringing about a sort of New Deal that all parties agreed on. Between 2010 and 2020, the state and private sector invested around seven billion US dollars in renewable energy. Success also down to long-term planning certainty New regulations were drawn up, tax incentives created, and technicians travelled the country giving talks. Farmers and universities were involved in the planning, and a total of 50,000 new jobs were created. And there’s another point: demand was regulated by law for the next 20 years. This makes energy a stable cost factor, explains Mendez: “People still say that renewable energies do not offer the same security of supply as fossil fuels,” says Mendez. “But Uruguay – which has not been affected by the current events in the Strait of Hormuz – is now far more reliable and secure in terms of energy supply,” he says. “What is the cost to Germany of the lack of liquefied natural gas imports? Costs are skyrocketing and ultimately hit people’s pockets.” High electricity costs So is everything fine in Uruguay? Not quite: despite the green energy boom, prices for ordinary consumers have barely fallen. A family of four pays an average of around 150 US dollars a month. Luis Andrade, for example, says: “We use as little electricity as possible because it’s expensive. That’s not going to change any time soon.” On top of that, oil still has to be imported, particularly for transport and industry. This accounts for around 35 per cent of the total energy mix. That is why phase two has now begun. And this is particularly evident in one man. Enrique Carbonero keeps the garage at the Montevideo terminal in order – the oily black stains on the floor also mark where each bus is parked. Carbonero says: “It’s all from the diesel. Diesel engines sweat and drip; the area around the combustion engines is dirty and smelly. Over there, where the charging station for our e-buses is, everything is clean. It’s important to us to make the difference visible.” The transition is underway Montevideo, Uruguay’s capital, is making the switch. Since 2021, the city transport authority’s fleet has been expanded exclusively with electric buses; today, one in four buses is electric. The aim is to reach 100 per cent by 2040. There are also incentives for taxi drivers to make the switch. Almost 70 per cent of all new cars in recent months have been electric vehicles. Uber driver Hernán Gómez made the switch six months ago. He says he now saves 900 US dollars a month in fuel costs. “At first I thought there must be something fishy about it. But no, because I did the maths – and the difference was huge.” Uruguay as a model of success for other countries? Whether Uruguay’s approach will work for other countries remains questionable, however: The country has strong winds, plenty of sunshine and is sparsely populated, particularly in rural areas. Added to this is the fact that there is very little energy-intensive industry. And there is something else giving the architect of Uruguay’s green transition pause for thought – politics based on dialogue is increasingly losing its footing, says Mendez. “Achieving something like this is becoming increasingly difficult worldwide. Today, governments come and go, and policies change radically. One side accuses the other of being wrong about everything,” he says. And: “So if we want to effectively rebuild the country from scratch with every change of government, everyone loses in the end.”