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Within a decade, Uruguay has transitioned from fossil fuel dependence to generating nearly 100% of its electricity from renewable sources, with wind energy accounting for nearly 40% and renewable energy sources reaching 56% in the supply matrix. Innovative financing models, such as power purchase agreements (PPA) and feed-in tariffs, were instrumental in attracting investment. These mechanisms provided financial stability and predictability, making renewable energy projects more appealing to investors. This approach leveraged private sector innovation and efficiency, enabling rapid scaling of wind energy projects and ensuring their timely completion and operational success.
These strategies were complemented by adapting workforce training to meet the new technical and professional needs. Local workers were able to participate in the development, construction, and operation of renewable energy projects, both in Uruguay and regionally. This transition has led to the creation of approximately 50,000 new jobs, representing about 3% of the country’s labor force, demonstrating what a just transition entails. Uruguay’s energy revolution demonstrates that a rapid and sustainable energy transition is achievable with the right mix of policies, partnerships, and financial strategies. This model can serve as a blueprint for other nations in the region seeking to enhance their energy security and sustainability.
The country has embarked on the second stage of its energy transition, focusing on electric mobility. With the support of the UNDP GEF MOVÉS project, the government approved an E-mobility Scheme that redirected fossil fuel subsidies for Public Transport Operators towards financing the upfront costs of electric buses, which supported the purchase of the first 33 electric buses in the country. More recently, in 2024, the Government approved a Sustainable Mobility Trust which reformed the previous Public Transport Trust to further promote the adoption of electric buses by redesigning the current reimbursement scheme for the price of diesel and by adding criteria for the maximum age of the fleet for environmental, energy efficiency and road safety reasons. Through incentives and pilot testing programs, together with the adaptation of the normative, regulatory, and fiscal framework, MOVÉS has significantly strengthened the e-mobility ecosystem in Uruguay.
Further, to support the second energy transition, the government of Uruguay together with UNDP, UNIDO, and UN Women has established the Renewable Energy Innovation Fund (USD 10 million fund of the SDG Joint Fund), a catalytic co-investment fund together with commercial banks to boost the decarbonization of the industrial and transport sectors. Additionally, the development of a hydrogen economy is set to decarbonize local industry, boost exports, and attract additional investments, ushering in a new era of industrialization based on the powershoring investment thesis. Uruguay is committed to consolidating a green hydrogen and derivatives industry that, according to its 2040 Green Hydrogen Roadmap, could reach a turnover of US$ 1900 million per year and generate more than 30,000 quality jobs.
This article is also published on the UNDP. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.
