Electricity sector in Uruguay
 | |
| Data | |
|---|---|
| Electricity coverage (2008) | 98.7% (total), (LAC total average in 2007: 92%) |
| Installed capacity (2009) | 2.5 GW |
| Share of fossil energy | 37% |
| Share of renewable energy | 63% (including large hydropower) |
| GHG emissions from electricity generation (2006) | 1.55 Mt CO2 |
| Average electricity use (2008) | 2,729 kW•h per capita |
| Distribution losses (2007) | 18%; (LAC average in 2005: 13.6%) |
| Consumption by sector (% of total) | |
| Residential | 41% |
| Industrial | 24% |
| Commercial and public sector | 35% |
| Tariffs and financing | |
| Average residential tariff (US$/kW·h, 2008) | 0.177; (LAC average in 2005: 0.115) |
| Average industrial tariff (US$/kW·h, 2008) | large consumers: 0.047, medium consumers: 0.131 (LAC average in 2005: 0.107) |
| Services | |
| Sector unbundling | No |
| Share of private sector in generation | 6% |
| Share of private sector in transmission | 0% |
| Share of private sector in distribution | 0% |
| Competitive supply to large users | No |
| Competitive supply to residential users | No |
| Institutions | |
| No. of service providers | 1 (UTE) |
| Responsibility for transmission | UTE |
| Responsibility for regulation | URSEA (Unidad Reguladora de Servicios de Energia y Agua) |
| Responsibility for policy-setting | National Directorate of Energy and Nuclear Technology (DNTEN) |
| Responsibility for the environment | National Directorate of Environment (DINAMA) |
| Electricity sector law | Yes (1997) |
| Renewable energy law | No |
| CDM transactions related to the electricity sector | 3 registered CDM projects; 251,213 t CO2e annual emissions reductions |
The electricity sector of Uruguay is largely based on domestic hydropower and is reliant on imports from Argentina and Brazil. Uruguay’s indigenous energy resources are limited to hydro energy, biomass and other renewable resources; however, the former has been practically developed in its entirety and the latter entails relatively high costs.
Over 60% of installed capacity in the country is hydro, almost all of it produced by four hydroelectric facilities. The remainder of the installed generation capacity is mostly covered by expensive small thermal power plants and mobile diesel generators, activated during peak demand. This leaves Uruguay vulnerable to seasonal rainfall patterns, even though, under normal hydrological conditions, Uruguay can supply its off-peak domestic demand.
The Energy Strategy Guidelines defined by the Ministry of Industry, Energy and Mines (MIEM) in 2006 aim at the diversification of energy sources, the increase of private participation in new renewable power generation, the increase in regional energy trade, and the promotion of energy efficiency. According to the National Directorate for Energy and Nuclear Technology (DNETN), grid-connected wind power generation is one of the domestic resources with best potential in Uruguay for the medium and long term.[1]
Electricity supply and demand
Installed capacity
Installed electricity capacity in 2009 in Uruguay was 2,510.5 MW (including half of the capacity of the Argentina-Uruguay bi-national Salto Grande). Of the installed capacity, about 63% is hydro, the rest being mostly thermal and a small share of wind and biomass.[2] The power system exhibits characteristics and issues of hydro-based generation. The apparently wide reserve margin conceals the vulnerability to hydrology. In dry years it is necessary to import over 25% of the demand from Argentinian and Brazilian markets.[1]
About 56% of generation capacity is owned and operated by UTE, the national utility. The remaining capacity corresponds to the Salto Grande hydroelectric plant (945 MW), to co-generation or to small private investments in renewable sources. The table below shows the plants that are currently operated and owned by UTE:[3]
| Plant | Installed capacity (MW) |
|---|---|
| HYDROELECTRIC PLANTS | 1,511 |
| Terra | 152 |
| Baygorria | 108 |
| Constitución | 333 |
| STEAM THERMAL UNITS | 255 |
| 3rd and 4th | 50 |
| 5th | 80 |
| 6th | 125 |
| GAS TURBINES | 532 |
| AA | 20 |
| CTR | 212 |
| Punta del Tigre | 300 |
| WIND | 10 |
| Sierra de los Caracoles | 10 |
| DIESEL GENERATORS | 2 |
Installed capacity has barely changed in the last few years. The most recent addition was the 300 MW Punta del Tigre Plant, whose last units started operations in 2008. The existing large hydroelectric potential has already been developed and the existing thermal units are low performing.[1] Total generation in the year 2008 was 8,019 GWh, 56.1% of which were from hydroelectric sources, with 42.2% being thermal.[2]
Imports and exports
In recent years, the Uruguayan electricity system has faced difficulties to supply the increasing demand from its domestic market. In years of low rainfall, there is a high dependency on imports from Brazil and Argentina. Exports have historically been negligible. In particular, no electricity has been exported in 2009.The table below shows the evolution of imported electricity since 1999:[2]
| Year | Argentina (MW) | Brazil (MW) | Total (MW) |
|---|---|---|---|
| 1999 | 707,640 | 61 | 707,701 |
| 2000 | 1,328,015 | 62 | 1,328,077 |
| 2001 | 116,815 | 5,877 | 122,692 |
| 2002 | 558,958 | 153 | 559,111 |
| 2003 | 433,913 | 315 | 434,228 |
| 2004 | 1,934,774 | 413,143 | 2,347,917 |
| 2005 | 834,863 | 750,346 | 1,585,209 |
| 2006 | 2,023,753 | 808,638 | 2,832,392 |
| 2007 | 573,629 | 214,960 | 788,589 |
| 2008 | 832,648 | 128,794 | 961,442 |
| 2009 (1) | 737,613 | 433,249 | 1,170,861 |
(1) January–June 2009 These energy exchanges happen through two existing interconnections, a 500kv line with Argentina, through Salto Grande, and a 70kv line with Brazil, through Garabi.[4]
Demand
Total electricity consumption in 2008 was 7,114 GWh, which corresponds to a per capita consumption of 2,729 kWh.[3] Share of consumption by sector was as follows:[4]
- Residential: 41%
- Industrial: 24%
- Commercial: 20%
- Public lighting and others: 15%
Demand and supply projections
In the period 2002-2007, after the 2002-2003 economic and financial crisis, electricity demand increased 4.9% per year on average. Electricity demand increased by 7.5% between 2006 and 2007, from 6,613 GWh to 7,112 GWh, reaching a per capita value of 2,143 kWh. Yearly demand increase is expected to be about 3.5% during the next ten years.[2]
Reserve margin
Maximum demand on the order of 1,500 MW (historic peak demand, 1,668 MW happened in July 2009[5]) is met with a generation system of about 2,200 MW capacity. This apparently wide reserve margin conceals a high vulnerability to hydrology.[1]
Service quality
Access to electricity in Uruguay is very high, above 98.7%. This coverage is above average for countries with public electricity services.[4] Quality of service is perceived to be good both by companies and residential users. Companies suffer losses of just about 1.1% of their sales due to electricity service interruptions [6]
Interruption frequency and duration are considerably below the averages for the LAC region. In 2004, the average number of interruptions per subscriber was 7.23, while duration of interruptions per subscriber was 9.8 hours. The weighted averages for LAC were 13 interruptions and 14 hours respectively.[7]
UTE has implemented a series of measures to reduce electricity losses, which were particularly high during the 2002-2003 crisis.[7] In December 2007, losses were still high, about 18%, of which 7% to 8% were of technical nature.[8]
Responsibilities in the Electricity Sector
The National Directorate of Energy and Nuclear Technology (DNTEN) formulates energy-sector policies. The regulatory functions are assigned to URSEA, the regulatory body. Both transmission and distribution activities are fully under the control of UTE, as established by the 1997 law.
Private companies
Currently, there are four private companies that generate electricity for their own consumption and sell their surplus to the grid: Botnia (biomass, 161 MW), Agroland (wind, 0.3 MW), Nuevo Manantial (wind, 10 MW) and Zenda (natural gas, 3.2 MW). The Azucarlito plant (5 MW) operates in the spot market.[9] The current 6% private contribution to the generation park is expected to increase as investments in new wind power plants materialize.
| Activity | Private participation (%) |
|---|---|
| Generation | 6% of installed capacity |
| Transmission | 0% |
| Distribution | 0% |
Renewable energy resources
Renewables could play a role in future energy supply, in particular wind power, allowing Uruguay to reduce its dependence on imports.
The country is a signatory to the International Renewable Energy Agency.[10]
All the potential for large hydroelectric projects in Uruguay has already been developed. Existing plants are Terra (152 MW), Baygorria (108 MW), Constitucion (333 MW) and the bi-national Salto Grande, with a total capacity of 1,890 MW.
Uruguay has a favorable climate for generating electricity through wind power, but its cost – estimated at US$45–50/MWh for large projects (50-100 MW) - is still uncertain. Consequently, the estimated wind potential of 600 MW cannot yet be taken as a feasible value, from an economic standpoint.[1] Despite those difficulties, according to the Government’s strategic plan, Uruguay will have 300 MW of installed wind capacity in 2011 and should reach 500 MW in 2015. The National Environmental Directorate (DINAMA) has already received several requests for new wind projects and UTE had a very positive response to the bidding process launched in mid-2009[11] In August 2009, the government of Uruguay approved a Decree that allows UTE to bid 150 MW of wind power. USD 300 million of private investment are expected as a result.[12]
The first wind farm in Uruguay, the 10 MW Nuevo Manantial project in Rocha, which will sell the electricity generated to UTE, started operations in October 2008. A few months later, in January 2009, UTE’s 10 MW wind farm in Sierra de los Caracoles also started operations.[11]
Biomass based on renewable sources such as rice husk could generate up to 20 MW at competitive prices. Firewood has already been used as a substitute for fuel oil in the 1980s, and cellulose projects expect to generate up to 65 MW for sales to the network.[1]
History
Power sector reform
In 1997, the national electricity law was updated following the principles of the so-called “standard model,” which contemplated the separation of regulatory/governance functions from corporate functions, and put in place the regulatory agency URSEA and a market administrator, ADME. The reform contemplated the remuneration of generators in order of merit, the creation of a wholesale market with regulated prices in transmission and distribution, where competition is not possible.[1]
The reform has not been effectively implemented. After passing the modifications to the electricity law, secondary legislation was not forthcoming and the system continued to operate without any significant change. The new model was regulated in 2002 and it was expected that new operators would enter into a competitive market. The market did not develop as planned and demand actually decreased due to the economic crisis in the region. For instance, natural gas provision, which could have supplied new power generating units, did not materialize. Although URSEA and ADME were established, they cannot yet fulfil most of the functions established in their mandate.[1]
Dependence on imports
For a full decade no power capacity was added to the power system. Prior to the completion of the 100 MW Punta del Tigre diesel power plant in August 2005, UTE had not added a power station to the system since 1995, when the last unit of Salto Grande came online. The absence of commissioning of new production facilities during this extended period was the product of a conscious, strategic decision to take advantage of market developments in Argentina and in the region, which would allow imports to fill any Uruguayan shortfalls, while exporting hydropower surplus production to Argentina and Brazil during wet years.[1]
Dependence on imports from Argentina started to become problematic in 2004. Before 2004, UTE was able to supply its demand through a combination of contracts and purchases on the Argentinean spot market. As a result of the Argentine energy difficulties, UTE’s contracts with Argentina for firm supply of 365 MW were reduced to 150 MW and were not extended beyond 2007. Notwithstanding this forced reduction in supply from Argentina over the low hydrology period of 2004-06, UTE was able to maintain energy imports through a noticeable increase of imports from Brazil and purchase of energy from the Argentine spot market.[1] In 2008, supply costs increased substantially as the drought, high fuel costs and low availability of power in neighboring countries.
Policy options
The Energy Strategy Guidelines for Uruguay were defined in 2006 by the Ministry of Industry, Energy and Mines (MIEM). This strategy includes: (i) diversifying energy sources to reduce costs and emissions, as well as increase energy security; (ii) increasing private participation in new renewable power generation; (iii) increasing regional energy trade; and (iv) facilitating availability and acquisition of energy efficient goods and services, including efforts to raise public awareness regarding demand-side management interventions. According to the National Directorate for Energy and Nuclear Technology (DNETN), grid-connected wind power generation is one of the domestic resources with both medium and long term potential in Uruguay.[1]
The government has taken action to promote RE development. In March 2006, the executive power issued Decree No.77/2006 to foster private generation through wind, biomass and small hydropower plants. A target of 60 MW was established for the first tender, which was conducted by UTE in August 2006. Although bids received for wind and biomass projects were all higher than US$70/MWh, this can be attributed to the small size of the proposed projects and the uncertainty of contractual arrangements.[1]
Interconnecting with Brazil is also particularly attractive. The expansion of the interconnection capacity with Brazil may be carried out either along the Coast or from Salto Grande. This expansion would contribute to diversifying the supply sources and could be done in order to take advantage of the installation of large thermal (coal) plants in the South of Brazil.[1]
Tariffs
For 2008, the overall weighted average tariff was US$0.139/kWh. Average tariffs for some sectors are presented below:
- Residential: US$0.177/kWh
- Large consumers: US$0.047/kWh
- Medium consumers: US$0.131/kWh
- Public lighting: US$0.164/kWh
Environmental impact
OLADE (Organización Latinoamericana de Energía) estimated that CO2 emissions from electricity production in 2006 were 1.55 million tons of CO2.[13] As of September 2009, there were only three registered CDM projects in Uruguay, all of them related to energy: the Montevideo Landfill Gas Capture and Flare Project, the Fray Bentos Biomass Power Generation Project and a project on partial substitution of fossil fuels with biomass in cement manufacture. Total expected emissions reductions are 251,213 tons of CO2e per year.[14]
External assistance
The only active energy project financed by the World Bank in Uruguay is the Energy Efficiency Project (PERMER), with a USD 6.88 million grant from the Global Environmental Facility. The objective this project is to increase the demand for and competitive supply of energy efficiency goods and services, contributing to improved efficiency of energy use, reduced reliance of the Uruguayan economy on imported electricity and fuels, and reduced emissions from the energy sector.
See also
Notes
- ^ a b c d e f g h i j k l m ESMAP 2007
- ^ a b c d MIEM-DNETN Statistics
- ^ a b UTE en cifras 2008 Cite error: The named reference "UTE cifras" was defined multiple times with different content (see the help page).
- ^ a b c CIER Statistics
- ^ ADME
- ^ 'World Bank Survey on Investment Climate, 2007
- ^ a b Benchmarking data of the electricity distribution sector in Latin America and Caribbean Region 1995-2005
- ^ UTE
- ^ World Bank
- ^ "Global support for International Renewable Energy Agency growing fast". Big News Network.com. 10 September 2014. Retrieved 11 September 2014.
{{cite news}}: Italic or bold markup not allowed in:|publisher=(help) - ^ a b Asociación Empresarial Eólica
- ^ [1]
- ^ OLADE
- ^ UNFCCC
Sources
- ESMAP 2007. Strengthening Energy Security in Uruguay.
External links
- UTE
- National Energy and Nuclear Technology Directorate (DNTEN)
- Electricity Market Administrator (ADME)
- National Environmental Directorate (DINAMA)
