Uruguay achieved a model energy transition and today generates almost 100% renewable electricity, making it a global example to follow.

The small Latin American country managed to cut its costs in half compared to the use of fossil fuels.

Physicist Ramón Méndez Galain, who led this transformation, argues that the same model could be replicated anywhere in the world if there is political will to change the rules of the game.

The South American country generates about 99% of its electricity from renewable sources.

Thermal plants, which account for between 1% and 3%, are only activated when hydroelectricity, wind, and solar do not cover the entire demand.

The energy matrix combines approximately 45% hydroelectricity, up to 35% wind energy, 15% biomass, and solar generation to complete periods of lower production.

This diversification allowed the total cost of electricity to be reduced to about half compared to a fossil-based system.

For Méndez Galain, Uruguay’s energy director between 2008 and 2015, the energy transition was never just a climate issue.

“It was, above all, an economic issue”, explains the physicist.

Thus, on the path of the energy transition, Uruguay demonstrated that clean energy can be cheaper, more stable, and job-generating than oil or gas.

The Uruguayan energy transition attracted nearly 6 billion dollars in renewable investments over a five-year period.

This process generated 50,000 jobs, a particularly relevant figure for a country of 3.5 million inhabitants.

However, the most significant change may not be in the megawatts produced, but in the economic stability.

Thanks to its model energy transition, Uruguay stopped suffering from the fluctuations of the international fuel market.

The dependence on imported oil, which was unsustainable in the early 2010s, was practically eliminated.

This transformation was not only technological but also institutional.

The country promoted long-term capacity markets, eliminated fossil subsidies, and created competitive auctions for wind and solar energy that drastically reduced prices.

Méndez Galain insists that the key is not in technology, but in institutions.

If the rules favor real competition, renewables prevail on their own merits.

The central elements of the energy transition in Uruguay include:

• Elimination of subsidies for fossil fuels
• Creation of competitive auctions for renewable projects
• Long-term capacity markets that ensure regulatory certainty
• Political continuity over five consecutive governments
• Utilization of domestic resources (wind, hydroelectricity, biomass, sun)

The IMF estimates more than 1.3 trillion dollars annually in direct subsidies to fossil fuels globally, and more than 6 trillion in indirect subsidies.

For Uruguay, eliminating these artificial advantages allowed renewables to compete on equal terms.

Delegations from Mexico, Chile, Colombia, the Netherlands, and South Africa have studied the Uruguayan energy transition model.

Additionally, countries like Honduras, the Dominican Republic, and Chile have publicly analyzed economic data seeking to apply similar strategies.

International financial institutions see the Uruguayan experience as proof that renewables are an economic option, not just an environmental one.

The message is clear: the energy transition works best when it saves money and creates jobs.

Beyond the reduction of emissions, Uruguay generated positive environmental impacts that are less visible:

• less air pollution in urban areas;
• reduction of industrial waste through energy recovery from biomass, and;
• reduction of risks associated with spills or fuel transportation.

Méndez Galain argues that the question was never whether renewables could work. The question was whether governments would be able to change the rules that kept them at a disadvantage.