Interview: Uruguayan national director of energy Ramón Méndez

URUGUAY: Uruguay is a small country, but it has big plans. This can be seen from the officially forecast for installed wind capacity. This year started with 50MW and is set to end with 500MW, an increase of 900%.

Uruguay national director of energy Ramón Méndez

The country is expected to reach 1.039GW by June of next year, and 1.346GW by January 2016, which would cover 30% of country's energy requirement.

The recent entry into operation of two 50MW wind farms, plus a private report claiming that wind power components topped the Uruguayan import lists in the first two months of 2014 is just the tip of the iceberg.

"Wind is the most mature technology, has reasonable costs and a clearly important potential in Uruguay," said national director of energy Ramón Méndez. "For us, the price of wind energy is very convenient, between $0.04 and $0.05 per kilowatt hour".

Uruguay has brought in numerous overseas companies, such as Nordex and Gamesa, to develop wind through its auction process. "About six or seven years ago, we were one of the first countries to take forward mechanisms such as auctions," Méndez said. "We have no grants for renewable energy or for any form of energy; there are only tax incentives related to the development of national components. Those who offer the best prices have a guaranteed power purchase agreement, a 20-year contract with the state-owned electricity distribution company."

The state-owned National Administration of Power Plants and Electrical Transmissions, known as UTE by its Spanish acronym, is the sole electricity distributor in Uruguay.

"As a result of the introduction of renewable energy in our country, far from increasing energy prices, as has happened in Europe, it has reduced costs. And all this transformation is allowing us to lower our power generation costs by 30%," Méndez said.

Possibly of most interested is the country's view on how it will introduce wind into Uruguay and how it will be central to its energy production. "Next year we will have a dispatch system that so far has not been developed in any other country. There is no coal, nuclear power or natural gas in Uruguay; we have wind energy, and for a long time, we have had hydroelectric power.

"For several hours throughout the day, 100% of electricity will be wind power. Hydropower will monitor the variations of wind energy every ten minutes. We'll have energy stability throughout the day and throughout the year with the hydro-wind combination," Méndez claimed.

He added: "We are working closely with Energinet, the Danish national transmission system operator for electricity. Also with Spanish, German and Portuguese experts. We did run models to analyse problems of voltage, voltage sags, frequency stability, stability of networks — we have analysed all aspects we believe are in play. At least until 2020, the model works perfectly with existing reserves in our hydroelectric reservoirs."

However, there are potential obstacles. Despite Méndez's claim that "Uruguay's wind potential is virtually limitless", there is a good reason why only 1.4GW will be available in early 2016. "This is the maximum technically feasible, we won't continue installing simply because of the network stability," he said.

Also there are no plans to build a domestic wind industry in the country, as Brazil is doing. Méndez said the capacity that Uruguay can install is too small. "We try to generate a productive integration primarily with Brazil, to try producing wind turbines that may have Uruguayan components," added the National Director of Energy.

Finally, Mendez talked about how to develop wind plans is impacting the country economically. "At this moment wind farm installation is worth about $2 billion, but the volume it represents as a whole is even more important than any other investment in the history of Uruguay, the largest investment we've had so far.

"The speed of that transformation is an important driving force for our economy and, at the same time, what is more important, we are showing that it is possible to install renewable energy at lower costs and without subsidies".