In the heart of South America, Uruguay is making waves on the global stage—not for its soccer prowess or its beef exports, but for something perhaps even more ambitious: its quest to become a model of clean, renewable energy. With an electricity mix already boasting approximately 94% renewables, Uruguay stands as a pioneer in decarbonization, drawing international attention as the climate crisis intensifies and the region grapples with the fallout of continued fossil fuel expansion.
According to Dialogue Earth, Uruguay’s energy matrix in 2025 is a fascinating blend: 46% hydropower, 27% wind, 19% biofuels, and just 2% solar. While those numbers are impressive, the government isn’t resting on its laurels. Instead, it’s gearing up for the next phase of its energy transition—one that leans heavily on solar power to ensure the grid stays green in the face of growing demand.
"Models have been developed in the country to draw up generation expansion plans that indicate the most suitable sources to be installed. These show future expansions in electricity generation should mainly come from photovoltaic and wind power," Arianna Spinelli, national director of energy at Uruguay’s Ministry of Industry, Energy and Mining (MIEM), told Dialogue Earth. The country’s current installed wind power capacity sits at 1,500 megawatts (MW), while photovoltaic power capacity is 300 MW. The plan? Add another 1,100 MW of solar capacity by 2040.
Two major solar expansions are already underway. The first, a 25 MW solar plant at Punta del Tigre along San José’s coast, is scheduled to come online in July 2026. The second, a 75 MW solar park in Melo, Cerro Largo, is set to begin operations as early as October 2025. Together, these projects represent a combined investment of USD 91 million, according to Darío Castiglioni, director of the National Administration of State Power Plants and Electrical Transmission (UTE). "The projects have required a combined investment of USD 91 million, and are in response to solar power becoming an increasingly affordable energy source," Castiglioni explained.
This expansion is more than a technical upgrade—it’s a national mission. Uruguay’s environment minister, Edgardo Ortuño, emphasized to Dialogue Earth that promoting renewables is a "fundamental part" of sustainable development. The country’s Long-Term Climate Strategy, established in 2021, set a bold target: carbon neutrality by 2050. Achieving this requires not just clean electricity, but also energy efficiency, electromobility, and the electrification of demand. That means decarbonizing transport and industry, boosting energy storage, and positioning Uruguay as a regional hub for green hydrogen—hydrogen produced entirely from renewable sources.
"We plan to make significant progress in sustainable mobility at the family level and in public transport with electric mobility," Ortuño said. "But also in road freight, river and air transport, which means advancing in the development of green hydrogen, which also represents a step forward in the expansion of solar energy in the country."
Ramón Méndez, executive director of the Ivy Foundation and president of REN21, told Dialogue Earth that Uruguay’s initial energy transition was spurred by climate and environmental concerns, but now, economics are the main driver. "Renewables are the cheapest sources and also make you independent of fluctuations in fossil fuel prices. Electricity produced with photovoltaic panels is cheaper than that produced with wind turbines," Méndez noted.
The Punta del Tigre project was awarded to a consortium comprising Spain’s Prodiel Energy and Uruguay’s Teyma in October 2024, serving as a pilot for foreign participation in Uruguayan solar. The same consortium landed the larger, 138,000-panel Cerro Largo project in October 2025, besting eight other proposals. China’s influence looms large—both projects will use Chinese solar panels, and Chinese companies are involved in Uruguay’s electricity transmission systems. As Rodrigo Alonso, co-director of the Uruguayan Renewable Energy Association (AUdER), explained, "For cost reasons, practically everything that is installed in Uruguay comes from China. It dominates the solar market by several orders of magnitude, both in manufacturing production and in its own installations worldwide."
Chinese entities don’t just offer cheaper parts—they also provide financing at favorable rates, making electricity more affordable for consumers. Yet, as Méndez pointed out, the installation, civil works, and subsequent electricity supply remain in Uruguayan hands, keeping the economic benefits at home. Castiglioni added that, "although Uruguay may be a very small market for China, the country is like a gateway to the region—if this relationship proves fruitful, other Latin American countries are more likely to continue working with China on green development."
Of course, no energy project is without its environmental footprint. Solar parks do take up land, but as Spinelli told Dialogue Earth, "the currently installed capacity occupies 0.0033% of Uruguay’s area. Therefore, even if the installed capacity is multiplied several times over, these are not significant areas for a country with a low population density." Wind farms, by contrast, have a greater visual impact and can disrupt bird corridors, but both experts agree these drawbacks pale in comparison to the devastation wrought by fossil fuels.
Meanwhile, demand for electricity in Uruguay is only going up. With a historic annual growth rate of 2%, and new sectors like electromobility, green hydrogen, and data centers coming online, the need for new generation alternatives is urgent. In 2024, the grid’s demand hit 12.2 terawatt-hours—excluding the coming surge from data centers and hydrogen projects, which could add another gigawatt of photovoltaic power by 2030. The MIEM’s 2024-2043 Electricity Generation Expansion Plan, published in March, projects national demand reaching 14 terawatt-hours per year from 2035 onward. To keep pace, the plan calls for installing 2,100-2,420 MW of new wind and 1,130-1,375 MW of new solar capacity by 2043.
Fortunately, Uruguay’s grid is ready for the challenge. Spinelli assures that "it should not be a problem to connect wind and photovoltaic generation in the coming years," thanks to planned and ongoing work on transmission systems. Castiglioni confirmed that UTE has made a "very strong" investment in energy distribution.
But Uruguay’s ambitions don’t stop at its borders. In 2022, energy exports reached almost USD 400 million, close to 1% of GDP, making energy a non-traditional export product for the country. "Uruguay is already working at the regional level to promote greater energy integration and to better manage the availability of low-cost electricity," Spinelli said. As neighboring countries begin their own renewable transitions, Uruguay’s expertise and surplus electricity could become a valuable regional commodity.
Contrast this with the broader Latin American picture, where, as reported by The Climate Reality Project Latin America, fossil gas expansion continues to wreak havoc—from fracking in Argentina’s Vaca Muerta to pipeline projects in Mexico and gas flaring in Ecuador. The International Energy Agency has warned that no new fossil projects should be opened if the world is to achieve net zero emissions by 2050, yet over 950,000 km² of Latin America has been allocated to gas and oil exploration in the past decade. That’s more than the area of Venezuela.
At Climate Week New York 2025, experts called out the myth of “natural” gas as a clean transition fuel, highlighting its devastating methane emissions—80 times more potent than CO₂—along with biodiversity loss and health impacts. The upcoming COP30 climate summit in Belém is seen as a crucial opportunity to exclude fossil gas as a transition option, with Uruguay’s renewable model cited as proof that a just, equitable, and clean energy future is possible.
In a region often caught between fossil mirages and renewable dreams, Uruguay stands as a testament to what’s achievable with political will, smart policy, and a bit of sun and wind. The next decade will reveal whether its neighbors follow suit—or remain trapped in the fossil past.
