Drying up

Drought hits Uruguay's hydroelectric generation underlining need for renewables and storage.

Uruguay is facing a particularly dry South Hemisphere summer which, last November, saw the country register a 60% decrease in the production of electricity in the country compared to October and November 2019.

The situation is particularly serious in the water dam of Salto Grande, which has seen a 65% decrease compared to the levels registered in November 2019. Similarly, the water level at the Rincón del Bonete dam stands at 76.3 metres, almost four metres below the minimum 80 metres required during this time of the season.

The Uruguayan regulator, Electricity Market Administration (ADME), which depends of the Ministry of Industry of Uruguay has prioritised the use of thermal, combined cycle and wind power to preserve water reserves in the forthcoming months.

In the context of the current crisis, Silvia Emaldi, president of the state-owned company UTE said that the future of electricity generation in Uruguay should focus on solar energy, which, she argued, is the best complement for the current 1,500 MW capacity of wind energy infrastructure in the country.

A board member of the Latin American Energy Organisation (OLADE) told us, “Uruguay’s generation capacity is mostly diversified between wind, solar, hydroelectric and fossil heat, almost reaching full capacity only by using renewable energy sources. The main problem is that hydroelectric is the main source of generation and when the Uruguay river level is low we need fossil fuels.”

“The main problem is that hydroelectric is the main source of generation and when the Uruguay river level is low we need fossil fuels.”

Board member, Latin American Energy Organisation (OLADE)

The OLADE board member continued, “The current electricity generation model foresees a scenario [of water shortages] like the current once every ten years.” An ADME executive at the technical assistance department, claimed that “Uruguay has an energy surplus which allows the country to comfortably sell electricity to Brazil and Argentina and rebuy energy at convenient prices in periods of drought like the one the country is experiencing now.”

The ADME executive added, “Although the current situation is alarming and it is not likely to improve until March [2021], we have been through similar situations before. In the past, the country had to resort to fuel imports for electricity generation, a very costly option which has been solved with the boom of renewable energy sources.”

The same executive affirmed that “Despite the IADB loan to reform the Salto Grande water dam, in order to increase its power generation capacity, the generating reserve margin at the dam is minimal. Thus, future investments should be focused on wind power in the south of the country and solar power in the north of the country. However, I don’t think there will be any major tenders for several years”.

“Future investments should be focused on wind power in the south of the country and solar power in the north of the country.”

Executive, Electricity Market Administration

The OLADE board member agreed, “New tenders for major electricity generation projects will only take place between the 2023-2025 period, during the last two years of the current government. Furthermore, energy demand has not increased in Uruguay during the Covid-19 pandemic.”

The board member continued, “If there are to be major investments in the energy sector in Uruguay, they will take place in the storage, H2 energy, electromobility and digitalisation of the electricity network. Uruguay needs to improve the efficiency of energy storage and open its market to retailers. This will facilitate an improvement its profit margins in the sale of energy surpluses to neighbouring countries.”

It’s good news for the environment too!

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