Uruguay has built one of the world’s most renewable electricity systems without producing large amounts of oil, natural gas or coal. Hydropower once formed the main foundation of the national grid, but major investment in wind farms, biomass plants and solar power has reduced the country’s exposure to drought and imported fossil fuels. In 2025, renewable sources supplied 98% of Uruguay’s electricity generation.
That figure does not mean Uruguay has completed its energy transition. Oil products remain essential to road transport, agriculture and industry, while natural gas is imported from Argentina. The next stage of Uruguay’s energy strategy is therefore different from the first. The country no longer needs to prove that it can produce renewable electricity at scale. It must now use that electricity to reduce fossil fuel demand in transport, manufacturing and other parts of the economy.
From Hydropower Dependence to a More Balanced Electricity Mix
Uruguay’s modern energy story began with hydropower. The country developed large dams along the Río Negro and shares the Salto Grande hydroelectric complex with Argentina on the Uruguay River. These plants gave Uruguay access to domestic, low-carbon electricity long before wind and solar power became competitive.
Hydropower also created a major weakness. Electricity production depended heavily on rainfall, and dry years forced Uruguay to generate more power from imported oil. This made electricity costs less predictable and exposed the country to both weather conditions and international fuel prices.
The solution was not to replace hydropower. Uruguay instead built a more balanced system around it. Wind energy could produce electricity during periods when water levels were lower, while biomass plants provided a steadier source of power. Solar energy added another source with a different daily production pattern. Thermal plants remained available as backup, and international connections allowed Uruguay to exchange electricity with Argentina and Brazil.
This combination became the central strength of the Uruguay energy system. Different technologies do not produce power at the same time or under the same conditions, but together they reduce dependence on any single resource.
In 2025, Uruguay generated 15,855 gigawatt-hours of electricity. Hydropower remained the largest source, producing 6,100 GWh. Wind generated 4,457 GWh, biomass produced 4,415 GWh, and solar power supplied 591 GWh. Fossil-fuel plants generated only 293 GWh.
Uruguay’s 98% Renewable Grid Is Not the Whole Energy Economy
Uruguay is often described as a country powered almost entirely by renewable energy. That is accurate when discussing electricity generation, but it does not describe the full national energy system.
Electricity is only one form of final energy. Cars, trucks, tractors, industrial boilers and construction equipment still consume liquid fuels. Some factories use natural gas, petroleum products or direct biomass rather than electricity. Aviation and shipping also remain dependent on oil-based fuels.
The difference can be seen in the national energy balance. Renewable sources accounted for about 64% of Uruguay’s total primary energy supply in 2025, while non-renewable sources represented 35%. Imported electricity supplied the remaining 1%. This is an unusually high renewable share, but it is far below the 98% recorded in electricity generation.
Industry was responsible for 52% of final energy consumption in 2025, reflecting the importance of pulp production, forestry processing and other manufacturing activities. Transport accounted for 25%, households for 14%, commercial and public services for 6%, and primary activities such as farming and fishing for 3%.
Biomass residues were the largest individual source of final energy, supplying 38%. Electricity represented 19%, while diesel supplied 16%. These figures show why Uruguay’s next transition is more difficult. Building wind farms changed the electricity mix, but reducing diesel use requires changes in vehicles, logistics systems, industrial equipment and consumer behavior.
Hydropower Still Sets the Rhythm of Uruguay’s Electricity System
Uruguay’s main domestic hydroelectric plants are Gabriel Terra, also known as Rincón del Bonete; Baygorria; and Constitución, commonly called Palmar. The binational Salto Grande complex adds substantial capacity through Uruguay’s share of the plant.
Together, these facilities provide approximately 1,500 megawatts of hydroelectric capacity. They remain central to grid operation because reservoir plants can adjust production more easily than many wind or solar facilities. Water stored behind a dam can be released when electricity demand rises or when wind generation falls.
The limitation is rainfall. A serious drought can reduce reservoir levels, lower electricity exports and increase the need for thermal generation or imported power. Uruguay experienced this problem again during the drought that affected the region in 2022 and 2023. Renewable sources still generated 92% of the country’s electricity in 2023, but the fossil share rose to 8% because hydroelectric production declined.
Hydropower recovered strongly in 2024 and remained the largest source in 2025. Even so, climate variability will continue to influence electricity production. Uruguay’s wind and biomass capacity is therefore not simply an environmental addition to the grid. It is also protection against hydrological risk.
Wind Power Changed the Economics of Uruguay Energy
Wind power produced the most visible change in Uruguay’s energy landscape. Large wind farms now operate across the country’s open plains and low hills, taking advantage of strong and relatively consistent wind resources.
Uruguay has more than 1,500 MW of installed wind capacity, close to one-third of total national generating capacity. Private developers own most of this capacity, while the state electricity company UTE owns or manages a significant group of projects.
The growth of wind power was supported by long-term national planning rather than a single project. Uruguay created a stable investment framework, used competitive procurement and allowed private companies to build generation while UTE remained the main buyer and system operator. Long-term power-purchase agreements gave developers predictable revenue, which reduced financing risk.
This model allowed Uruguay to attract foreign investment without fully privatizing its electricity system. UTE retained a central role in generation, transmission, distribution and long-term planning, while private companies added capital and technical experience.
Wind generation reached 4,457 GWh in 2025, or about 28% of total electricity production. Its importance is larger than this percentage alone suggests. Wind reduced the amount of oil needed for thermal generation, helped preserve water in hydroelectric reservoirs and created electricity surpluses that could be sold to neighboring countries.
Biomass Connects Electricity to Uruguay’s Pulp and Forestry Economy
Biomass plays a much larger role in Uruguay than it does in most national electricity systems. Its importance is closely tied to forestry, pulp production and agricultural processing.
Uruguay has developed a major plantation forestry industry based largely on eucalyptus. Pulp mills use wood residues and black liquor, a byproduct of the pulping process, to produce heat and electricity. These plants first supply their own industrial operations and can then deliver surplus power to the national grid.
Other biomass sources include firewood, rice husks, sugarcane bagasse, biogas and residues from forestry, dairy production and other agricultural activities. This gives biomass a role in both electricity generation and direct industrial heat.
The full operation of Uruguay’s third major pulp mill caused a significant increase in biomass generation. The facility can supply more than 150 MW of firm renewable power to the grid after meeting its own needs. Biomass consequently produced 4,415 GWh in 2025, almost matching wind generation.
Unlike wind and solar, industrial biomass can produce electricity on a more controlled schedule. This gives it value as a steady source of renewable power. It also explains why Uruguay’s industrial sector appears so strongly in national energy statistics: some of the country’s largest energy consumers are also major energy producers.
Further biomass growth may be more selective. New standalone plants must compete with low-cost wind and solar generation. Future projects are more likely to be connected to pulp mills, biorefineries, waste treatment or other industrial processes that already create usable residues.
Solar Power Has a Smaller but Expanding Role
Solar energy remains smaller than hydro, wind or biomass in Uruguay, but its role is increasing. The country had roughly 270 to 330 MW of solar capacity by the middle of the decade, depending on the treatment of utility-scale projects and smaller connected systems.
Large photovoltaic plants supply electricity to the national grid, while rooftop and small-scale solar systems serve farms, businesses and homes. By 2025, Uruguay had more than 1,700 connected small photovoltaic projects with a combined capacity of about 44.5 MW.
Solar power fits Uruguay’s system because its strongest production occurs during daylight hours, when commercial activity and cooling demand can be higher. It can also reduce pressure on transmission networks when electricity is generated close to the point of use.
Its future value may increase as battery costs fall and electricity demand grows through electric vehicles, data centers and industrial projects. Solar generation reached 591 GWh in 2025, still below 4% of national production. That leaves room for expansion, especially if Uruguay needs additional renewable electricity for hydrogen production or industrial electrification.
Oil Remains Essential to Transport and the Wider Economy
Uruguay does not currently produce commercial quantities of crude oil. It imports crude and processes much of it at ANCAP’s La Teja refinery in Montevideo. ANCAP is the state-owned company responsible for refining, fuel supply and several other energy activities.
The La Teja refinery can process about 50,000 barrels of crude oil per day. Imported crude arrives by tanker at the Terminal del Este near José Ignacio in Maldonado Department. A buried pipeline approximately 180 kilometers long carries the oil from the terminal to storage tanks and refining facilities in Montevideo.
The refinery produces gasoline, diesel, aviation fuel, liquefied petroleum gas, fuel oil and other products. Uruguay also imports finished fuels when refinery output does not match national demand or when the facility is closed for maintenance.
Oil’s main importance is no longer electricity generation. Thermal plants use fossil fuels mainly as backup, accounting for less than 2% of electricity production in 2025. The larger challenge is transport. Diesel supports freight, buses, agricultural machinery and construction, while gasoline remains widely used in private vehicles.
This creates a clear division in Uruguay’s energy transition. Electricity is already very low carbon, but transport still depends on imported oil. Every electric bus, car or delivery vehicle can therefore reduce both emissions and fuel-import exposure, provided that charging infrastructure and vehicle prices support wider adoption.
Uruguay is also exploring whether it has offshore oil or natural gas resources. ANCAP has signed exploration contracts covering seven offshore areas, with private contractors carrying the financial and technical risk. Planned work includes three-dimensional seismic surveys and an exploratory well. These are frontier basins, however, and no commercial discovery can be assumed.
Natural Gas and Coal Play Limited Roles
Natural gas is present in Uruguay’s energy system but has never reached the scale seen in Argentina, Brazil or other larger regional markets. Uruguay has no proven commercial gas reserves and imports the gas it uses.
The Gasoducto Cruz del Sur connects Argentina with Uruguay through submarine and land sections. ANCAP purchases imported gas and arranges its transport before it is distributed to customers in Montevideo and other southern areas. Since May 2025, a contract with Pluspetrol has provided firm supplies to gas distributors, replacing an earlier arrangement with Argentina’s ENARSA.
Natural gas is used by some industrial, commercial and residential customers. It can also support refinery operations and selected thermal uses. However, the market is relatively small, and gas is not a major source of Uruguay’s electricity.
Coal is even less important. Uruguay has no proven coal reserves and no large coal-fired power fleet. Any coal or petroleum coke used by cement plants and other industrial facilities must be imported. Coal therefore does not shape national electricity policy, employment or regional development in the way it does in countries with large mining industries.
The small role of coal gave Uruguay an advantage during its electricity transition. It did not have to close a large coal-mining sector or replace a fleet of coal stations. Its main fossil challenge is oil demand rather than coal-fired electricity.
UTE, the National Grid and Regional Electricity Trade
Uruguay’s renewable transition depended on transmission infrastructure as much as generation. Wind farms and biomass plants could not have changed the national mix without a grid capable of moving electricity between rural production areas, industrial sites and urban demand centers.
UTE remains the central institution in this system. It owns major power stations, operates transmission and distribution networks, purchases electricity from private generators and supplies consumers across the country. Electricity service reaches approximately 99.8% of households.
Uruguay has around 4,900 MW of installed generating capacity, far more than its normal peak demand. This reserve allows the country to manage changing renewable output and export electricity during periods of high production.
Connections with Argentina provide approximately 2,000 MW of exchange capacity, while links with Brazil provide more than 500 MW. These connections allow Uruguay to sell surplus renewable electricity and import power when domestic production is lower. In 2025, Uruguay exported 1,022 GWh and imported 633 GWh, remaining a net electricity exporter.
Grid investment is continuing. UTE is developing a 500-kilovolt northern transmission ring to strengthen the network between the center and north of the country. The project is designed to reduce losses, improve reliability and support new renewable, industrial and transport demand. Its first section was energized in May 2026.
The next infrastructure challenge is storage. Hydroelectric reservoirs already provide a form of flexibility, and regional trade helps balance supply. As Uruguay adds more wind and solar capacity, batteries and other storage technologies may become more valuable.
Why Uruguay Does Not Generate Nuclear Power
Uruguay has no operating nuclear power plants, and nuclear energy contributes nothing to its electricity mix. Article 27 of the 1997 Electricity Market Law prohibits the use of nuclear-origin energy within the country.
Uruguay previously operated a small research reactor, but the facility was decommissioned and its fuel was returned abroad in 1997. The country continues to use nuclear technology in medicine, scientific research and radiological applications, but these activities are separate from electricity generation.
Nuclear power has occasionally returned to political and technical debate. A proposal introduced in 2025 sought to remove the general prohibition and create a possible legal route for conventional or small modular reactors. Removing the prohibition would not automatically produce a nuclear program. A power reactor would still require legislation, regulation, environmental review, financing and long-term technical planning.
For the near future, nuclear power is unlikely to be necessary for Uruguay’s electricity supply. The country already has more generating capacity than normal demand and can draw on hydro, wind, biomass, solar, thermal backup and regional trade. The stronger nuclear argument would emerge only if electricity demand rose sharply through hydrogen production, major industrial projects or widespread electrification.
Uruguay’s Second Energy Transition Moves Beyond the Grid
Uruguay’s first energy transition changed how electricity was produced. The second is focused on how energy is consumed.
Electric transport is one of the most direct opportunities. Because the grid is almost entirely renewable, replacing an internal-combustion vehicle with an electric vehicle produces a larger emissions benefit than it would in a country with coal-heavy electricity. Electricity consumption by the transport sector tripled in 2025, although it still represented less than 1% of electricity delivered to the national grid.
Public buses, taxis, company fleets and delivery vehicles may lead this transition because they travel predictable distances and can charge at central locations. Heavy freight and agricultural machinery will be harder to electrify and may require renewable fuels, hydrogen or other technologies.
Green hydrogen is another major part of Uruguay’s long-term strategy. The country’s wind and solar resources could support electrolysers that use renewable electricity to separate hydrogen from water. The hydrogen could then be used directly or converted into ammonia, methanol, synthetic aviation fuel and other products.
Uruguay sees hydrogen as both a domestic decarbonization tool and a possible export industry. Its Atlantic ports, stable power system, wind resources and access to biogenic carbon dioxide from biomass industries create useful conditions. However, large hydrogen projects will depend on international demand, financing, water planning, new generation and major infrastructure.
The Main Energy Challenges Facing Uruguay
Uruguay’s electricity transformation solved several old problems, but it created a new group of policy questions.
The first is how to manage weather risk. Wind and solar reduce dependence on rainfall, but renewable production still changes by season and hour. Strong transmission, storage, flexible demand and regional trade will be increasingly important.
The second is how to keep electricity affordable while paying for new infrastructure. Uruguay has a reliable system with substantial reserve capacity, but transmission upgrades, batteries, charging networks and new industrial connections require investment.
The third is how to decarbonize transport. Renewable electricity can replace gasoline and diesel, but vehicles must be affordable and charging must be convenient. Freight and agricultural equipment present a more difficult challenge than passenger cars.
The fourth is how to balance industrial growth with energy planning. Pulp mills have increased both energy use and renewable biomass production. Future hydrogen, data-center or synthetic-fuel projects could create much larger electricity demand and may require dedicated wind and solar development.
Finally, Uruguay must decide how fossil exploration fits with its climate and energy goals. Offshore exploration could reduce import dependence if a commercial discovery were made, but it could also create environmental, political and investment tensions. At present, exploration remains a possibility rather than an established source of supply.
The Future of Uruguay Energy
Uruguay’s energy system stands out because its renewable transition was based on practical national needs. Wind, biomass and solar reduced exposure to imported oil, supported reliable electricity and complemented an existing hydropower network.
The next stage will be slower and more complex. Uruguay must move clean electricity into transport, industrial heat and new export industries while protecting grid reliability and controlling costs. Oil will remain important in the near term, natural gas will retain a limited supporting role, coal will remain marginal, and nuclear power is unlikely to enter the mix without a major change in law and demand.
Uruguay has already completed the easier part of deep decarbonization: cleaning up electricity. Its long-term energy position will now depend on whether it can turn that clean grid into a broader economic advantage.
