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Uruguay: Leading promoter of renewable energy

Uruguay has a range of natural resources that offer major opportunities for the development of new sources of energy, in particular non-traditional renewables, including hydro, wind, solar, and biomass-based power generation, thanks to high water flows, predictable winds all year round, uniform sunlight throughout the country, and a thriving agro-industry.

In line with the objectives set by its national energy strategy—which the government implements as a matter of state policy—Uruguay has put in place a comprehensive regulatory framework based on a strong commitment to renewable energy sources that focuses on the development and adoption of renewables. Pursuant to the country’s general investment promotion scheme—Law 16,906, as regulated by Decree 02/012—renewable energy projects are eligible for additional incentives as they fall under the use of clean technologies. Moreover, Decree 354/009 grants specific tax incentives for the renewable energy sector. This attractive promotion scheme enables companies that invest in the sector to finance up to 80 percent of their investments through tax exemptions.

Uruguay is spearheading the world’s efforts in the field of renewable power generation. The country’s investments in renewables are also considerable compared to other countries. Both the government and private agents have invested heavily in them, with a total investment from 2010 to 2015 in excess of US$ 7 billion, a figure that puts the country’s annual investment in power infrastructure at more than 3 percent of the GDP.