Uruguay has built one of the most renewable electricity systems in the world, but electricity is only one part of its energy story. Hydropower, wind farms, biomass plants and solar installations now produce nearly all of the country’s power in favorable years. Oil still dominates transport, however, while natural gas and coal serve smaller industrial and household markets.
This contrast defines the Uruguay energy sector. The country has largely completed the first stage of its transition by changing how it generates electricity. Its next challenge is more difficult: using clean power to reduce petroleum demand in vehicles, industry, shipping and other activities. At the same time, Uruguay must protect its grid from drought, manage growing biomass production and decide how far it wants to go with green hydrogen and synthetic fuels.
How Uruguay Rebuilt Its Electricity System Around Renewable Energy
Uruguay’s renewable energy transformation did not begin with one large project. It came from a wider change in national energy policy. The country combined public planning, private investment, long-term power contracts and the central role of the state electricity company UTE.
This model allowed Uruguay to add wind, biomass and solar capacity without removing hydropower from the center of the system. Wind farms could produce electricity when wind conditions were strong, while reservoirs gave the system some ability to manage changes in supply. Biomass plants offered steadier output, and regional connections allowed Uruguay to trade electricity with Argentina and Brazil.
The results became especially clear in 2024. Renewable sources produced 99% of Uruguay’s electricity. Hydropower supplied 42%, wind supplied 28%, biomass produced 26%, and solar power contributed 3%. Fossil fuels supplied only 1% of electricity generation. [1]
These figures make Uruguay energy policy look almost complete, but they need context. The country’s electricity mix can change from year to year because rainfall affects hydropower. In dry years, Uruguay may use more thermal generation or import more electricity. When water conditions improve, hydroelectric production can recover quickly and reduce fossil fuel use.
Uruguay’s success therefore comes from diversification rather than dependence on one renewable source. Wind, water, biomass, solar power and regional trade support one another inside a relatively small national electricity system.
Hydropower and Wind Form the Core of the Uruguay Energy Mix
Hydropower has shaped electricity generation in Uruguay for decades. The country operates major plants on the Río Negro, including Rincón del Bonete, Baygorria and Constitución, also known as Palmar. Uruguay also shares the Salto Grande hydroelectric complex on the Uruguay River with Argentina.
Together, these facilities provide large amounts of low-carbon electricity, but their output depends on rainfall and reservoir conditions. This dependence became visible during the severe drought that affected Uruguay in 2023. Hydropower fell sharply, forcing the system to rely more heavily on other sources. Better water conditions in 2024 allowed hydroelectric generation to recover and again become the country’s largest source of power.
Wind energy gives Uruguay a second major renewable pillar. The open plains and low population density of the interior offer good conditions for wind farms. By 2024, the country had approximately 1,517 megawatts of installed wind capacity, almost equal to its 1,538 megawatts of hydroelectric capacity. [2]
This balance is unusual. Uruguay is not simply a hydroelectric country that added a few wind projects. Wind power is now large enough to influence national grid operations, electricity exports and the use of hydroelectric reservoirs.
Solar power remains smaller, with about 336 megawatts of installed capacity in 2024. Its 3% share of electricity generation was limited compared with hydro, wind and biomass, but solar can still play a growing role in distributed generation, rural sites and daytime demand. Its importance may rise as electric vehicles, batteries and new industrial projects change the shape of national electricity consumption.
Biomass Connects Uruguay’s Power Sector to Its Forestry Economy
Biomass is one of the most distinctive parts of Uruguay’s energy system. In many countries, biomass remains a small or traditional household fuel. In Uruguay, it is closely connected to modern industrial production, especially forestry, pulp and paper.
Large pulp mills use waste from industrial processes to produce heat and electricity. Black liquor, forestry residues, wood waste, rice husks, sugar cane material and other biological resources can be burned or processed for energy. Some industrial plants consume much of this electricity themselves and supply the remaining power to the national grid.
Biomass generated about 4,419 gigawatt-hours of electricity in 2024, the highest level recorded in Uruguay. This increase was strongly connected to the operation of the country’s third major pulp mill. [3]
The rise of biomass shows why Uruguay’s energy profile cannot be separated from its export economy. Forestry investment has changed land use, transport networks, industrial demand and electricity production. Pulp mills are not only major consumers of energy. They have also become power producers.
This relationship offers important advantages. Biomass generation is usually more predictable than wind or solar power, which helps balance the grid. It can also turn industrial waste into a useful energy source.
However, biomass is not automatically free of environmental questions. Its long-term value depends on forestry management, land use, transport emissions and the efficiency of industrial facilities. Uruguay must therefore judge biomass as part of a larger production chain, not simply label it renewable and ignore how it is produced.
Electricity Infrastructure Makes Uruguay a Regional Energy Partner
Uruguay’s electricity infrastructure is designed around one national interconnected system. UTE manages transmission and distribution, while the Administración del Mercado Eléctrico coordinates electricity dispatch and market operations.
Because Uruguay has a population and electricity market much smaller than those of Argentina and Brazil, international interconnections are especially valuable. Connections with Argentina offer around 2,000 megawatts of exchange capacity, while connections with Brazil provide approximately 620 megawatts. [4]
These links give Uruguay several options. It can import electricity when drought, maintenance or high demand creates pressure at home. It can export surplus renewable electricity when hydro reservoirs are strong and wind or biomass production exceeds domestic requirements.
In 2024, Uruguay exported approximately 2,026 gigawatt-hours of electricity, around eight times the amount exported during 2023. Most of that electricity went to Argentina, and hydropower was the main source behind the increase. [3]
Regional trade helps Uruguay avoid building every power plant only for domestic peak demand. It also creates a market for electricity that would otherwise be curtailed or wasted. This is important in a system with high wind production, because wind farms may produce strongly at times when local consumption is low.
The grid will still need continued investment. More electric vehicles, industrial electrification, solar installations, batteries and possible hydrogen facilities could create new areas of demand. Transmission planning must also connect inland renewable resources with Montevideo, coastal cities, industrial plants and export points.
Oil Remains Uruguay’s Main Energy Dependence
Uruguay’s electricity transformation has not removed its dependence on petroleum. The country has no commercial oil production and no proven hydrocarbon reserves in active production. Crude oil and petroleum products must therefore come from international markets. [5]
The state energy company ANCAP imports crude oil and operates the La Teja refinery in Montevideo. The refinery has a processing capacity of about 50,000 barrels per day and produces fuels for the domestic market. Uruguay also imports finished petroleum products when refinery output does not match demand. [5]
Oil is especially important in transport. Cars, trucks, buses, agricultural machinery, ships and aircraft continue to depend largely on gasoline, diesel and other liquid fuels. In 2024, transport consumed about 1,444 kilotonnes of oil equivalent in petroleum products, compared with only a small amount of electricity. [6]
This is the largest gap between Uruguay’s clean electricity image and its complete energy system. A country can generate almost all its electricity from renewables while still consuming large quantities of oil on roads and in industry.
Electric vehicles offer one path forward. Uruguay’s relatively clean grid means that replacing a petrol or diesel vehicle with an electric model can produce a meaningful emissions reduction. Electrification is especially practical for urban buses, government fleets, taxis and private vehicles that follow predictable routes.
Heavy freight, aviation and shipping are harder to electrify. These sectors may require biofuels, hydrogen derivatives, synthetic fuels or major improvements in transport efficiency. Uruguay’s future oil demand will therefore depend on more than the number of electric cars sold. It will also depend on freight policy, public transport, port activity and the development of alternative fuels.
Natural Gas and Coal Play Small but Targeted Roles
Natural gas is present in Uruguay, but it has never become a foundation of the national energy system. The country does not have commercial gas production and has traditionally received imported gas from Argentina.
Gas is used in parts of industry, commerce and the residential sector. It can also support refinery operations and thermal electricity generation. ANCAP has used natural gas to replace fuel oil in furnaces and boilers at the La Teja refinery, reducing the carbon intensity of those operations.
Even so, natural gas consumption remains modest. Uruguay recorded final natural gas consumption of approximately 47 kilotonnes of oil equivalent in 2024. Petroleum products, biomass and electricity were all much larger parts of final energy demand. [7]
Coal has an even smaller role. Uruguay does not have a coal-based electricity system, large coal mines or a national network of coal-fired power stations. Mineral coal consumption reached only about 4.7 kilotonnes of oil equivalent in 2024 and was concentrated in industrial use. [6]
Coal should therefore be understood as a minor industrial input rather than a strategic energy source. Uruguay does not face the same coal phaseout problem as South Africa, Poland, India or other countries where coal supports large power systems and mining regions.
The limited roles of coal and natural gas helped make the electricity transition easier. Uruguay did not have to close a large fleet of coal plants or manage a major domestic gas industry. Its main fossil fuel problem is oil, particularly in transport.
Why Uruguay Does Not Use Nuclear Power
Uruguay has no nuclear power plants, operating research reactors or nuclear fuel storage facilities. Its nuclear-related institutions focus mainly on radiological protection and the medical, industrial, agricultural, research and educational uses of nuclear technology. [8]
Nuclear power has appeared at different times in national energy discussions, but it has not developed into an active electricity program. Uruguay’s small electricity market would make a traditional large reactor difficult to integrate. A single large nuclear plant could represent an unusually high share of total national capacity and would require major financial, technical and regulatory commitments.
The growth of wind, hydropower and biomass has also reduced the immediate pressure to pursue nuclear generation. Uruguay already has a low-carbon electricity system, so nuclear power would not solve the country’s largest remaining energy problem: petroleum use in transport.
Small modular reactors could reopen the discussion in the future if the technology becomes commercially proven and affordable. At present, however, Uruguay’s energy strategy is centered on renewable generation, regional connections, electric transport and new renewable fuels rather than nuclear electricity.
Geography Gives Uruguay Both Advantages and Risks
Uruguay’s geography has strongly influenced its energy choices. The country has no high mountain ranges, major coal deposits or producing oil fields. Instead, it has broad plains, river systems, agricultural land, commercial forests and access to the Atlantic Ocean.
The plains offer strong conditions for wind development. Rivers support hydropower. Forestry and agricultural industries provide biomass. The coastline creates options for port-based fuel imports, offshore energy studies and possible exports of hydrogen derivatives or synthetic fuels.
A relatively small population also makes national planning easier in some areas. Uruguay can connect most electricity demand through one integrated system, and major infrastructure decisions involve fewer regional markets than in much larger countries.
At the same time, geography creates risks. Hydropower is exposed to drought and changing rainfall. Wind and solar output vary with weather. Coastal infrastructure may face storms, flooding and sea-level pressure. Biomass production depends on the long-term condition of forests, soil and water resources.
The drought of 2023 showed why climate adaptation is now part of energy security. Uruguay’s diversified system prevented the loss of hydropower from becoming a complete electricity crisis, but fossil generation increased. The strong hydroelectric recovery in 2024 then pushed renewable generation back to 99%.
This movement between years demonstrates the value of maintaining several energy sources, strong interconnections and backup thermal capacity even when fossil plants operate only for limited periods.
Green Hydrogen and Uruguay’s Second Energy Transition
Uruguay increasingly describes its next stage of development as a second energy transition. The first transition changed electricity generation. The second would use renewable electricity to transform transport, industry and export production.
Green hydrogen is central to this strategy. It can be produced by using renewable electricity to split water into hydrogen and oxygen. The hydrogen can then support industrial processes or be converted into ammonia, methanol and synthetic fuels.
Uruguay’s green hydrogen roadmap presents an ambitious scenario for 2040. It suggests that annual production could approach one million tonnes, supported by roughly 18 gigawatts of additional renewable capacity and 9 gigawatts of electrolysers. These are planning ambitions rather than existing capacity or guaranteed projects. [9]
The scale would be much larger than Uruguay’s present electricity system. Hydrogen development would therefore require new wind and solar farms, transmission lines, water planning, industrial facilities, ports, storage systems and international buyers.
Uruguay has several potential advantages. It has experience managing renewable projects, strong wind and solar resources, political stability, Atlantic port access and supplies of biological carbon dioxide from biomass-based industries. That carbon dioxide could be combined with green hydrogen to produce synthetic fuels.
The risks are also significant. International hydrogen markets remain uncertain, large projects require major investment, and local communities may raise questions about water, land, infrastructure and the distribution of economic benefits. Uruguay will need to avoid building projects only around optimistic export forecasts.
Hydrogen may still have practical domestic uses even if the export market develops slowly. It could help reduce emissions from fertilizer production, heavy trucks, shipping, pulp processing and refinery operations. Its strongest role may be in sectors where direct electrification is difficult.
What Uruguay’s Energy Model Has Achieved—and What Comes Next
Uruguay has shown that a small country without major fossil fuel reserves can build a reliable electricity system around renewable resources. Hydropower, wind, biomass and solar generation now work together with regional connections and limited thermal backup.
The achievement is substantial, but it does not mean that Uruguay has completed its energy transition. Petroleum remains essential to transport, imported crude still feeds the La Teja refinery, and climate conditions can produce large changes in annual hydropower output.
The next phase will be less visible than building wind farms. It will involve electric vehicles, transmission upgrades, industrial efficiency, batteries, sustainable biofuels and careful decisions about hydrogen. Uruguay must also protect the social and environmental foundations of the forestry, water and land systems that support its renewable energy economy.
The central question is no longer whether Uruguay can generate clean electricity. It is whether the country can use that electricity to reduce fossil fuel demand across the rest of its economy while preserving reliability, affordability and public support.
