Industry Trend Analysis - Renewables Growth Underperformer Status Maintained - OCT 2017


BMI View: Growth in Uruguay ' s renewables sector will slow over our 10-year forecast period due to a lack of new projects in development. Whilst the contribution non-hydropower renewables makes to the country ' s generation mix will remain high - at around 40% in 2026, the size of the sector will be fairly limited compared with its regional neighbours.

Uruguay's renewables sector has grown rapidly over the last five years, driven by the government's desire to diversify its power mix from volatile hydropower and expensive oil-fired power generation. As such, the government - via the state-owned utility UTE - adopted a number of regulatory incentives to stimulate growth in renewables; among these, technology-specific auctions proved the most effective. The gradual commissioning of the strong project pipeline that emerged off the back of these tenders resulted in renewables capacity increasing from under 200MW in 2008 to just over 1.7GW in 2016. We expect growth in 2017 to be similarly robust, at 30%, as the projects that are currently under development are brought online ( see ' Renewables Growth Will Slow Down After 2017 ' , December 20 2016).

However, beyond 2017 we expect growth to slow significantly; we forecast annual average growth rates in non-hydro renewables capacity of 2.3% between 2018 and 2026. This view is largely predicated on the lack of a project pipeline to support growth, as UTE is yet to tender for new wind and solar projects. We do not expect UTE to hold further auctions at present, due to the overcapacity in the Uruguayan power sector.

Renewables Set To Slow
Uruguay Non-Hydro Renewables By Type & Growth
f = BMI forecast. Source: EIA, IRENA, BMI

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