How Uruguay Attracted $6.7 Billion for Its Electricity Sector Through Secure Investments

Uruguay has successfully transformed its electricity sector into a secure investment destination, attracting $6.7 billion over the past five years. Carlos Pombo, who served as the general manager of Uruguay's national energy administration (UTE) for 29 years, explained the country's strategy at a forum in Asunción, Paraguay.

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by no means are 3 or 4 distribution lines going to pass through any house.

Pombo outlined Uruguay's model, which separates energy generation, opening it to private competition, from transmission and distribution. These latter services remain under geographic concessions, a practical approach given that multiple distribution lines are not feasible for every household. This structure allows private generators to assume their own risks while ensuring essential grid infrastructure is managed centrally.

A critical element of Uruguay's success lies in its long-term energy purchase agreements (PPAs). By offering contracts lasting 20 years, UTE provides private investors with a high degree of certainty. This security enables companies to finance a significant portion of their projects, typically 70% to 80%, through multilateral development banks and international financing organizations.

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What we had in terms of investment margins from the government wasn't enough to make the necessary investments.

Pombo shared how Uruguay previously relied heavily on hydroelectric power, reaching 94% dependence. However, this led to a deficit in transmission and distribution investment because UTE's budget competed with other essential public services like health and education. The fiscal limitations pushed UTE to seek private capital, a move that has proven highly effective in modernizing the country's energy infrastructure and ensuring a stable supply.

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I have a contract in which UTE of Uruguay is assuring me that it will buy this energy for 20 years. I want financing so that you allow me to do the work.