Uruguay scored 1.75 to finish 6th among the 55 Climatescope countries and is the smallest nation in the survey’s top 10. In Latin America, it ranks 3rd, below only Brazil and Chile.
In the wake of an energy crisis last decade, Uruguay has successfully held reverse auctions for clean power contracts.
These have spurred renewable project development and should substantially diversify Uruguay away from heavy reliance on large hydro and high cost thermal plants. As of the end of 2013, 49% of the Uruguay’s 3.5GW of installed capacity came from large hydro plants. Since 2009, Uruguay has contracted for 880MW of wind capacity and 58MW of solar projects, hoping to increase non-hydro capacity share.
The tenders have triggered a surge in investment. In 2013, Uruguay’s $56bn economy attracted $1.3bn in clean energy investment. Most of the funds have come from multilateral and export-import institutions that view Uruguay as an attractive and stable market.
Looking ahead, Uruguay could find it challenging to maintain recent levels of clean energy investment, simply given its limited size. Nonetheless, it is now poised to become a world leader in installed wind capacity as a percentage of overall capacity.