Uruguay, a small South American nation often overlooked in global headlines, has quietly become one of the world’s most striking success stories in renewable energy. As of November 28, 2025, the country generates about 99% of its electricity from renewable sources, a feat that has drawn international attention and inspired delegations from around the globe to study its approach. Now, with HIF Global moving forward on a USD 5.3 billion e-fuel project—having just received environmental approval—the country’s energy revolution is entering a bold new phase.
How did a nation of just 3.5 million people pull off such a dramatic transformation? According to BBC, the journey began with a pragmatic realization: the energy transition wasn’t just about climate change, but about economics. Physicist Ramón Méndez Galain, who served as Uruguay’s energy director from 2008 to 2015 and led this transformation, put it plainly: “It was, above all, an economic issue.” For Uruguay, clean energy wasn’t just greener—it was cheaper, more stable, and a powerful engine for job creation.
The numbers tell a compelling story. Uruguay’s energy mix now includes approximately 45% hydroelectricity, up to 35% wind energy, 15% biomass, and a smaller but crucial contribution from solar sources. Thermal power plants, reliant on fossil fuels, account for a mere 1% to 3% of generation and are only fired up when renewables can’t meet demand. This diverse portfolio has allowed the country to slash the total cost of electricity to about half of what it would be under a fossil-fuel-based system. That’s not just a marginal improvement—it’s a seismic shift in the economics of energy.
Investment followed. Over a five-year period, Uruguay attracted nearly $6 billion in renewable energy investments. For a country of its size, that’s a massive influx, and it translated into 50,000 new jobs. In a place where every job counts, this was a game-changer. But perhaps the most significant benefit wasn’t measured in megawatts or employment figures. The country’s energy transition delivered a kind of economic stability that had long eluded it. Gone were the days of riding the rollercoaster of global oil prices. By the early 2010s, Uruguay had practically eliminated its dependency on imported oil—a move that shielded its economy from international market shocks.
How did Uruguay make this happen? According to El País, the answer lies not just in technology, but in institutions and policy. The government eliminated subsidies for fossil fuels, created competitive auctions for wind and solar projects, and established long-term capacity markets that provided the regulatory certainty investors crave. Crucially, this wasn’t the pet project of a single administration. Political continuity across five consecutive governments ensured that the strategy stayed on course, regardless of who was in power. That kind of stability is rare, especially in Latin America, and it was essential to Uruguay’s success.
“If the rules favor real competition, renewables prevail on their own merits,” Méndez Galain insists. Indeed, when artificial advantages for fossil fuels were stripped away, renewables didn’t just compete—they dominated. The International Monetary Fund estimates that more than $1.3 trillion is spent annually on direct subsidies for fossil fuels worldwide, with total indirect subsidies exceeding $6 trillion. By refusing to play that game, Uruguay let the market decide—and the market chose renewables.
The world has noticed. Delegations from Mexico, Chile, Colombia, the Netherlands, and South Africa have all visited Uruguay to study its energy transition model. Countries such as Honduras, the Dominican Republic, and Chile have publicly analyzed Uruguay’s economic data, hoping to replicate its success. International financial institutions now see Uruguay as proof positive that renewables are not just an environmental imperative, but an economic one.
Of course, the benefits go beyond the bottom line. Uruguay’s transition has delivered environmental dividends that are both visible and subtle. Air pollution in urban areas has dropped, thanks to the sharp reduction in fossil fuel use. Industrial waste has been cut through energy recovery from biomass. And with less oil being imported and transported, the risks of spills and related disasters have diminished. These are the kinds of changes that improve daily life, even if they don’t always make the headlines.
Yet, as Méndez Galain points out, the real lesson isn’t about whether renewables can work—they clearly can. The question, he says, is whether governments are willing to change the rules that have kept renewables at a disadvantage for so long. Uruguay’s experience suggests that with the right policies and political will, the transition to clean energy is not only possible, but profitable.
Now, Uruguay’s energy evolution is entering a new era. HIF Global, a major player in the renewable fuels sector, is pressing ahead with a USD 5.3 billion e-fuel project in the country, having just secured environmental approval as of November 28, 2025. According to Quantum Commodity Intelligence, this marks a significant step forward for e-fuels—synthetic fuels produced using renewable electricity, water, and captured carbon dioxide. The project signals Uruguay’s ambition not just to generate clean electricity, but to become a leader in next-generation fuels that could help decarbonize sectors like aviation and shipping, where electrification is tough.
Why is this important? While Uruguay’s near-100% renewable electricity grid is an achievement in itself, e-fuels offer a pathway to decarbonize industries that still rely on liquid fuels. If successful, HIF Global’s project could make Uruguay a key exporter of sustainable fuels, further boosting its economy and cementing its reputation as a global clean energy pioneer.
Other countries are watching closely. As the world grapples with the urgent need to cut emissions and build resilient economies, Uruguay stands as a living laboratory—a place where the energy transition isn’t just theory, but reality. Its story is a reminder that with vision, determination, and the right incentives, even small nations can lead the way in solving some of humanity’s biggest challenges.
As Uruguay continues to innovate and attract major investments like HIF Global’s e-fuel venture, it’s clear the country isn’t just setting an example—it’s setting the pace. The road ahead won’t be without obstacles, but if Uruguay’s experience so far is any indication, it’s a journey worth watching.
