Gone with the wind - Uruguay’s love affair with aeolus

In 2005, Uruguay did not have a single windmill. Last year, almost 700 wind turbines distributed among forty public and private parks generated 38 % of electricity compared with 1 % in 2013. This revolution places Uruguay second only to Denmark, the global wind energy leader with 43 % of power from wind.

But this was not always so. There was a time when more than 65 % of the power was generated from imported oil, and that impacted all the numbers, not only of the electric sector, but of the entire economy.

Wind paradise

Uruguay is especially well-suited for wind, with low ridges smoothing the flow of steady winds coming off the Atlantic Ocean. That helps turbines run at about 40 percent of capacity factor on average. In a way, Uruguay is like a big wind farm because it’s flat, the highest point being just 500 meters (1640 feet). By comparison US wind farms run at 34 percent of capacity factor on average.

This helps wind farms in Uruguay produce electricity for about half the cost of electricity generated by natural gas-fired plants, and provides a hedge against drought which has drastically reduced power from hydroelectric dams in the past, forcing the country to fall back heavily on fossil fuels.

With only 2.9 % of electricity generated by fossil fueled thermal plants, Uruguayans have achieved energy sovereignty, without relying on international oil prices, or the effects of climate change on rainfall. A model with its own brand that seeks to inspire other nations.

This revolution was highlighted in a paper by the Institute of Energy Economics and Financial Analysis (IEEFA) “Power-Industry Transition, Here and Now - Wind and Solar Won’t Break the Grid: Nine Case Studies” highlighting the cases of Denmark, South Australia, Uruguay, Germany, Ireland, Spain, Texas, California and Tamil Nadu. See paper here.

A landmark agreement

The agreement of all the political parties was key to the success of this accelerated change. A reliable legal framework also contributed by allowing investors and industries to set up their own wind parks and sell the energy to the state electric utility under long term PPA, in the spot market, or use it for self-consumption.

Another novel measure to extend the benefits beyond the state and large companies was an unprecedented sale of shares of wind farms to small savers for as low as $ 100.

2018 figures (%generation by source)

• Wind 38 %
• Solar 3.1 %
• Hydro 49.4 %
• Biomass 6.6 %
• Thermal 2.9 %

Evolution of power generation by source in the period 2004 - 2018

2006 – One of the driest years of the hundred on record

Power demand of 8.18 GWh was met with 3.50 GWh of hydro (43%), 1.88 GWh of termal (23%) and 2.81 GWh of imports (34%).

The result: a power crisis, restrictions, millions of dollars on imports, losses for the state utility UTE. The cost of generation hovers at 400 USD/MWh. UTE spends 370 MUSD between diesel and power imports. Profits of 77 MUSD in 2005 turn to losses of 73 MUSD in 2006.

2007 - Just one year later, very rainy

Power demand of 8.87 GWh was met with 9.91 GWh of hydro (89%), 1.17 GWh of termal (13%) and 0.22 GWh is exported (2%).

2008 - 2012

Hydro variability is complemented with thermal and imports.

Biomass adds to the power mix, as excess power from large pulp mill in 2007.

2013 - 2018

This period saw a gradual growth of wind from nil to 1,500 MW and solar PV to 226 MW. Excess power from a second pulp mill was added in 2014.

In red, you see the high variability of hydro.

In purple, the steady growth of wind.

In orange, the nascent solar PV.

In blue, biomass.

In green, the retreat of thermal.

In light blue at the bottom, despite a growth in demand, excess generation is exported to neighboring Argentina and Brazil.