Uruguay offers attractive opportunities for investment in renewable energy due to its natural resources, growing energy demand, and supportive regulatory framework. The country has abundant wind, solar, biomass, and small hydro resources. Energy demand is increasing along with high GDP growth rates. The government aims to source 50% of primary energy from renewables by 2015 through policies like mandatory biofuel blending and incentives for wind, biomass, and solar projects. Uruguay's stable democracy, open investment environment, and political risk insurance make it a low-risk destination for renewable energy investment in Latin America.

1. February 2012
Renewable Energy
Investment opportunities in Uruguay

2. 1. Attractive environment for business
Uruguay has a natural environment that is free of natural disasters. It is politically stable with a
representative democracy and a rotation of three main political parties.
The country boasts a stable macroeconomic environment and a booming economy. GDP in 2010
was US$ 40,265 million, with a per capita GDP of US$ 11,996. Uruguayan economy enjoys high
growth rates, achieving in 2010 an 8.5% rate consolidating the seventh consecutive year of
growth.
Uruguay offers the most open business environment in the region:
There are no restrictions on the repatriation of capitals, profits, dividends or interests.
Foreign investors do not need permits or prior authorizations. Local companies can be
100% foreign-owned.
Foreign investment is treated equally as domestic investment under the law. Uruguay has
agreements for investment promotion and protection with 27 countries, including Spain,
United States, Finland, France and United Kingdom, among others.
The currency exchange market is open and there are no limits on foreign currency trading.
Investments can be made in any currency.
There are no restrictions on hiring foreign staff (except for companies located in Free Zones
where a 75% of employees must be local).
Obtaining a residence permit is a speedy process. Anyone who has entered the country
legally can apply and commence work, even while awaiting approval.
Citizens from most Western countries do not require a visa to enter the country.
Uruguay offers a risk free destination for business and investment in Latin America:
Uruguay holds a privileged position as top business location according to several global
indicators. The following charts illustrate some of these indicators.
1

3. Table No. 1: Uruguay's global rank in terms of democracy and political and social stability
Business costs of Crime
Low Corruption Democracy Index Global Peace Index
and Violence
Ireland 19 Ireland 12 Ireland 11 Ireland 28
Chile 22 U.S.A. 17 Uruguay 21 Spain 52
U.S.A. 24 Spain 18 Spain 28 Uruguay 70
Uruguay 25 Uruguay 21 Costa Rica 31 Chile 78
Spain 31 Costa Rica 24 Chile 38 U.S.A. 84
Costa Rica 50 Chile 34 Argentina 55 Costa Rica 115
Brazil 73 Brazil 47 Brazil 74 Argentina 116
Colombia 80 Argentina 51 U.S.A. 82 Brazil 123
Argentina 100 Colombia 57 Colombia 139 Colombia 134
Source: Transparency Source: Economist Source: Economist Source: World Economic
International; 2011 Intelligence Unit; 2010 Intelligence Unit; 2011 Forum; 2010/11
Uruguay offers insurance against political risk to investors through an agreement between the
Uruguayan government and the U.S. Overseas Private Investment Corporation (OPIC). Such
insurance covers all risks (except credit card risk) with claims subject to international arbitration.
2. Why invest in renewable energy in Uruguay?
Strong expansion of the economy in recent years, together with a stagnation in
generation capacity
The rising energy demand, as a consequence of high GDP growth rates, the absence of native
fossil fuel resources and the scarce margin to incorporate additional hydroelectric generation,
led the Government to propose development policies for native non-traditional renewable
energy sources.
Abundance of renewable energy resources
Uruguay has good sun radiation and vast wind and biomass resources, the latter related to the
strength of its agricultural, livestock and forestry industry. There already are several successful
cases of wind farms and forestry companies that recycle their waste for the generation of
energy, instead of causing environmental problems.
2

4. Attractive tax incentive regime for the industry and investment
There is a regulatory framework oriented towards renewable energy industry growth, increase
in participation of private sector electricity generation and investment in the sector. In 2007, an
investment promotion policy was approved, which allows the company to recover under certain
conditions up to 100% of the invested amount through Income Tax exemption. Decree
354/0091, which favors certain activities related to the renewable energy industry, was
approved in 2009.
Clear and transparent Industry regulatory framework
There is a legal and regulatory framework in place that promotes the incorporation of
renewable energy into the Uruguayan energy matrix. Electricity generation is open to the
private sector, enabling anybody to participate in the calls.
3. Industry description
In Uruguay the energy generation industry is divided in three main sectors: electricity, liquid
fuels and gas. The National Board of Energy (DNE) is responsible for the proposition and
coordination of the national energy policy, body under the Ministry of Industry, Energy and
Mining (MIEM). Among its main duties is the coordination and guidance of the participant’s
actions when operating within the energy industry and participation in the development of the
regulatory framework that governs energy activity. The Regulatory Agency for Energy and Water
Services (URSEA) is the governing body of the sector; it was created as a decentralized body of
the Executive Branch, with the capacity to control activities in the sector such as the electrical,
gas and hydrocarbon market. Presented below is the industry institutional flow chart:
1
Available at: http://archivo.presidencia.gub.uy/_web/decretos/2009/08/245%20.pdf
3

5. Source: Uruguay XXI based on data from the Ministry of Industry, Energy and Mining (MIEM)
Total annual energy consumption in Uruguay exceeds 4,000 Ktoe and is an increasing trend. In
2010 it was 4,131 Ktoe. Non renewable energy has been the main source of the Uruguayan
energy matrix: crude oil accounts for 48.2% of the total primary matrix. However, renewable
energy is a growing trend. In 2010, 31.7% accounted for biomass and 17.6% for hydro /wind.
4

6. Chart No. 1 – Uruguayan energy matrix (%, Year 2010)
Source: Uruguay XXI based on DNE
3.1. Government policy and legal framework in Uruguay
Passed by the Executive Branch in 2008 and ratified by the Multi-Party Energy Board of Congress
in 2010, 2005-2030 Uruguayan Energy Policy sets out the main forward-looking national legal
framework for energy.
The Energy Policy intends to incorporate native resources in general and renewable energies in
particular. The search for source and supplier diversification is part of the objective in order to
cut costs, promote national energy generation, reduce oil dependency and open to native
source participation. Detailed below are the short-term goals (2015) and the main lines of action
regarding renewable energies:
Native renewable energy sources comprise 50% of the total primary energy matrix.
Electrical Energy: the integration of non-traditional renewable sources accounts for 25%
of the power generation, particularly:
- Wind Energy: 1,000 MW installed publicly and privately by 2015.
5

7. - Biomass: 200 MW installed privately by 2015.
Bioethanol: Mandatory minimum of 5% of total blend with gasoline, as of January 1 st,
2015.
Biodiesel: Mandatory minimum of 5% of total blend with diesel, as of January 1st, 2012.
Solar Thermal: Designed equipment that promotes inclusion by residential, industrial,
commercial and service sectors.
Small Hydro Plants (PCH): Boost for PCH introduction.
3.2. Electrical system in Uruguay 2
3.2.1. Regulatory Framework
Law 16,832 of the Electricity Regulatory Framework was passed in September 1977 and ratified
by citizens in a referendum in 1998. The main amendments that this law brought about were:
Open energy generation was established, enabling the entry of private participants and
a wholesale electricity market was created (MMEE).
Trade liberalization with the region, contracts between generators and users from
Uruguay and Argentina are allowed, for instance.
State-owned electric utility UTE is allowed to partner with other companies.
The regulatory and corporate functions of the State are split. Agencies with specific
duties are created.
2
Source: UTE
6

8. Picture 1. Uruguayan interconnected power system3
The Uruguayan system consists of 770 km of 500 kV which interconnects Salto Grande plants
through Rincon del Bonete dam and Palmar to the main consumer center, which is Montevideo.
It also includes a branch to San Carlos city, located southeast of the country. Likewise, there is a
3
Source: DNE
7

9. 3549 km network of 150kV that connects the power generation plants with almost all the major
cities and main consumer centers (49 stations of 150kV).
4. Why invest in renewable energies in Uruguay?
4.1. Natural Resources
Uruguay has vast natural resources for the development of renewable
energies, such as hydraulic, wind, solar and biomass.
Biomass
Uruguay has a developed forestry, agricultural and livestock industry in which power is
generated from rice, sugar cane, cellulose, sorghum and wood.
Livestock has been Uruguay’s traditional largest export sector with other exports such as rice,
cereals and soy gaining more prominence. There already are several successful cases of wind
farms and forestry companies that recycle their waste for the generation of energy, instead of
causing environmental problems.
Forest area comprises 4.2% of Uruguay’s total surface, with over 700,000 planted hectares. The
forestry sector has experienced an outstanding growth in recent years. Forestry waste in the
cultivation stage is estimated to be around 10% to 30% of the standing tree. After undergoing
industrial process such as sawmilling, waste production is between 50% and 70% of the log.
There are a total of 434 sawmill plants in Uruguay. 209 of these are working effectively. It is
estimated that Uruguay is capable of generating a maximum output of up to 121MW of
electrical power at a national level on the basis of the different types of waste (forestry,
agricultural, urban and agro-industrial). Forestry waste account for the largest proportion at a
national level (65%), followed by urban solid waste (21%) and agricultural waste (10%).
8

10. Chart No. 2 - Energy generation from forestry, urban, agricultural and agro-industrial waste at
national level, in national potential (MW) and percentage.
Source: DNE
Investments in equipment and services required for the development of these projects can be
mainly of local supply. Uruguay can cater for all the necessary technology and human resources
and is capable of meeting the manufacturing capacity needs required for the development of
these thermal plants. National companies estimate that between 50 and 70% of the investment
could be carried out with national capital goods and know-how.
Large sawmills are another advantage in the production of ethanol from sawdust, provided that
production plants could set up beside these sawmills, thus notoriously reducing transportation
costs and stock needs for instance.
Solar
Uruguay is located in a geographical latitude which ranges from 30º 04´ to 34º 53´, where daily
incidental solar radiation is approximately 1700 Wh/m2. On a summer’s day, solar radiation in
Uruguay can oscillate between 1000 Wh/m2 and 7500 Wh/m2 and in winter between 200
Wh/m2 and 3000 m2, presenting similar values to those of Spain. There is great solar energy
availability, however seasons should be considered together with the resource’s inherently
fluctuating nature.
9

11. In the case of solar thermal energy, an extensively used global indicator can be used to assess
the expansion of this technology (installed area/ 1000 inhabitants ratio). By year 2010, a value of
3.7 m2/1000 inhabitants for effectively working installed area is obtained4.
The first photovoltaic pilot farm is setting up in the department of Salto with a capacity of 480
Kwp and a solar panel area of 10,000 m2. According to the international cooperation program
JICA, the aim of this project is "To promote the use of clean energy and reduce emissions
through the use of the photovoltaic system interconnected to the national network. Likewise,
the Uruguayan Government will evaluate the integration and performance of this technology in
the National Interconnected System." It is estimated that this photovoltaic farm will reduce
7,500 tons of CO2 during the project’s life span and an estimated production of 645 MWh/per
annum, which is equivalent to the consumption of 215 households approximately.
Picture 2. Uruguayan solar map – Average daily solar radiation (kWh/m2)5
4
DNE, Renewable energies in Uruguay 2011
5
Source: “Uruguayan Solar Map” DNE
10

12. Source: DNE
Wind energy6
Uruguay has very good wind availability for power generation. The
wind map made available by the Engineering School of Universidad
de la República can be used as reference, with different height
estimation for up to 90 meters7. There are currently four wind farms
in Uruguay: Nuevo Manantiales S.A. (with a capacity of 13 MW),
Agroland S.A. (with a generating capacity of 450 kW), Emanuele
Cambilargiu wind farm, property of state-owned company UTE (with a capacity of 20 MW) and
Madgalena Wind Farm (owned by Kentilux, with a generating capacity of 10 MW).
Picture 3. Uruguay wind map8 (Height: 90 m)
6
Source: www.dne.gub.uy and www.energiaeolica.gub.uy
7
According to reported values for Caracoles and Kentilux wind farms, plant factors oscillate between 35% and 40%.
8
Source: Wind energy program
11

13. Source: DNE
Hydroelectricity
Hydro generation is one of the main energy sources in Uruguay. The hydro plant is composed of
three cascaded stations in the Río Negro of a total of 593 MW (Gabriel Terra 152 MW, Baygorria
108 MW and Constitución 333 MW) and of a bi-national station in the Río Uruguay of 1880 MW
of which 940 MW correspond to Uruguay, the rest to Argentina. Currently, hydro exploitation in
Uruguay is reaching its maximum limit, with the existence of an additional capacity for small
hydro installations.
4.2. Energy demand
Electricity consumption in the last two years has grown at rates similar to those of Uruguay’s
Gross Domestic Product (GDP). This growth is due to various factors that act simultaneously
pushing up demand: strong expansion of the economy with an average growth rate of 6.3% in
the last five years, strong increase in investments in productive sector, improvements in real
household income and incorporation of several electrical appliances into the consumption
pattern of the Uruguayan population.
It is expected that in 2011 and 2012 electricity consumption will drop in comparison to 2010,
with rates that will vary between 6.9% and 5.1%; such values are similar to BCU’s rate forecast
for GDP growth.
12

14. Chart No. 3. Uruguay’s GDP and electricity consumption (Annual variation %)9
Source: Uruguay XXI based on data from BCU and U.T.E.
4.3. Favorable regulatory framework
Law 16,906 of 1998 which declares the promotion and protection of domestic and foreign
investment is of national interest. For any investment project submitted and promoted by the
Executive Branch, up to a maximum of 100% of the invested amount may be computed as part
of the Corporate Income Tax (IRAE), depending on the type of project. Uruguay has a flat
national IRAE rate of 25%.
Personal property included in fixed assets and civil works are exempt from Wealth Tax. VAT
included in the purchase of materials and services for civil works can be recovered. Moreover,
the import of personal property included in fixed assets which is not competitive in the national
industry is exempt from import taxes or duties, as declared by said law.
There is a regulatory framework oriented towards renewable energy industry growth, increase
in participation of private sector electricity generation and investment in the sector.
9
Note (*): Energy consumption for 2011 and 2012 are estimates carried out by UTE and GDP growth are estimates
carried out by BCU.
13

15. Decree 354/00910, in force since 2009, grants tax incentives specific to the renewable energy
sector. The decree is established in Article No. 1111 of the Investment Promotion and Protection
Law (Law No. 16,906 of January 7th, 1998) and is created by Government stated priority to
promote the renewable energy sector12 as a sustainable productive development strategy.
Additionally, the Solar Thermal Energy Promotion Law (Law 18,585 of September 18 th, 2009)13
that declares of national interest the research, development and training in solar thermal energy
is also currently in force. It also intends to promote the insertion of this technology in the
diverse activity sectors in Uruguay.
On the other hand, Decree Nº 173/010 of June 1st, 2010 authorizes subscribers connected to the
low voltage distribution network to install renewable energy generation systems using sources
such as wind, solar, biomass or micro hydro. This decree is enshrined in the 2005-2030 National
Energy Policy of Uruguay, intended to foster the use of alternative renewable native energy
sources, being Uruguay a pioneer in South America in liberalizing the connection of electricity
generation from renewable energy sources to the grid.
5. Current panorama of renewable energy in Uruguay 14
There are several projects of electricity generation from renewable sources, some of them
already in operation and others about to commence. Some of the main projects are listed
below.
5.1. In operation, contributing to the electric network
10
Available at: http://archivo.presidencia.gub.uy/_web/decretos/2009/08/245%20.pdf
11 th
Investment Law (Law Nº 16,906 of January 7 , 1998), article 11. (Promoted activities and companies). In conformity
with the provisions of this law, companies with investment projects that have been declared promoted by the
Executive Branch will be able to access the benefit regime established in this chapter. Likewise, the promotional
declaration can fall on a specific sector activity, which is deemed to mean, the combination of undertakings conducive
to produce, commercialize or render certain goods or services. Source: UNASEP
12
This promotion is adjusted to the goals set forth in Law No. 16,906 and Decree No. 455/007 dated November 26,
2007, in particular with reference to qualified job generation, research increase, innovation development and cleaner
production.
13
Available at: http://archivo.presidencia.gub.uy/_web/leyes/2009/09/IE949.pdf
14
Source: ADME and DNE
14

16. 5.1.1. Biomass
Authorized
Name Investor’s Origin Investor Power
(MW)
UPM S.A. Finland UPM-Kymmene Oyj 161
Fenirol Uruguay/Greece Consortium of groups of investors 10
Consortium Aborgama – Ducelit,
Las Rosas Uruguay Municipality of Maldonado, U.T.E. and 1.2
UNDP
Weyerhaeuser
U.S.A. Weyerhaeuser 12
Productos S.A
Uruguay (90%) -
ALUR S.A. Venezuela ANCAP - PDVSA 5
(10%)
Bioener S.A. Uruguay Otegui Group 12
Galofer S.A. Uruguay/Brazil Consortium of 5 rice mills 12.5
Liderdat S.A. Uruguay Azucarlito Group 4.85
Total 218.55
5.1.2. Wind energy
Name Investor’s Origin Investor Authorized Power
(MW)
Nuevo Manantial 1 Argentina Bulgheroni 13
Group
Agroland Argentina Bulgheroni 0.3
Group
Kentilux S.A. Uruguay Private 10
Emanuele Cambilargiu Uruguay UTE 20
Total 43.3
5.2. Eligible renewable e nergy projects
5.2.1. Wind energy
Power capacity to
Company Department Call
be installed (MW)
Kentilux (expansion) 10 San José 77/006 and complementary
Ensol - luz de mar 40 Florida 77/006 and complementary
Impsa 15 Lavalleja 77/006 and complementary
Palmatir 50 Tacuarembó 403/009
Fingano 50 Maldonado 403/010
15

17. Jistok 50 Lavalleja - Maldonado 403/011
Ensol - luz de mar 50 Florida 159/011
Gemsa 42 Lavalleja 159/012
Aguas leguas 100 Tacuarembó 159/013
5.2.2. Biomass 15
Offered National
Name of Bidder power Components Department
(MW) (%)
Atlanwind S.A. 10.00 31.0% Treinta y tres
Mercovientos S.A. 10.00 30.5% Treinta y tres
Eolener S.A. 10.00 30.0% Lavalleja
Newelec S.A. 10.00 30.0% Durazno
Milsoun S.A. 10.00 30.5% Cerro largo
Tingelsur S.A. 2.50 30.0% Rivera
Amira S.A. 3.50 More than 50% Cerro largo
Bioenergy S.A. 20.00 55.0% Tacuarembó
Bioenergy S.A. 20.00 55.0% Tacuarembó
Tingelsur S.A. 3.15 30.0% Rivera
Lejanias S.A. (Tacuarembó bioelectrical 1) 15.00 55.0% Tacuarembó
Lejanias S.A. (Tacuarembó bioelectrical 2) 15.00 55.0% Tacuarembó
Lanas trinidad S.A. 0.60 31.0% Flores
Lejanías S.A. (Río negro - m´bopicua i) 15.00 55.0% Río Negro
Lejanías S.A. (Rivera bioelectrical i) 15.00 55.0% Rivera
Lejanías S.A. (Rivera bioelectrical ii) 15.00 55.0% Rivera
Wirdely S.A. (generation unit n°1) 20.00 30.0% Treinta y tres
Wirdely S.A. (generation unit n°2) 20.00 30.0% Durazno
Wirdely S.A. (generation unit n°3) 20.00 30.0% Durazno
Wirdely S.A. (generation unit n°4) 20.00 30.0% Florida
Montelecnor S.A. 20.00 51.0% Rivera
Lisger S.A. (lisger i) 20.00 30.5% Treinta y tres
Lisger S.A. (lisger ii) 20.00 30.0% Treinta y tres
Beltone S.A. (beltone i) 20.00 30.5% Lavalleja
Beltone S.A. (beltone ii) 20.00 30.0% Lavalleja
TOTAL 354.75
15
In the context of Decree 367/010, the following companies were proposed to generate energy from Biomass.
Source: UTE
16

18. 6. Sector investments
6.1 Investment projects
Firstly, with the passing of Decree 455/00716 in 2007 and its current amendment (10/Jan/2012)17
which regulates chapter III of Investment Promotion and Protection Law (16,906), a very
favorable and attractive investment climate has been created.
Investment projects concerning the renewable energy sector submitted to the Investment Law
Application Committee (COMAP) showed and irregular evolution between 2007 and 2011. In
2007 investment projects approved by COMAP were for the amount of US$27.7 million, with
only two projects submitted. However, in 2008 there was a notorious growth, achieving the sum
of US$ 87.9 million, with six investment projects submitted. The main projects in 2008 were
presented by companies URUFOR S.A. and BIOENER S.A. with a US$ 49.5 million investment and
GALOFER S.A. with US$ 20.5 million, for the installation of a Biomass power generating plant
(rice waste).
In 2009, there is a decrease in the number of submitted projects, achieving the value of US$
29.5 million, while 2010 recorded the highest figure for the period reaching an amount of US$
98.7 million, with 10 projects being submitted. The main project was concerning wind
electricity generation by the company GENERACION EOLICA MINAS S.A. with US$ 70 million. In
2011, the amount of submitted projects amounted to US$ 38.4 million, which corresponded to
three investment projects.
16
November 2007.
17
Available at: http://archivo.presidencia.gub.uy/sci/decretos/2012/01/mef_705.pdf
17

19. Chart No. 4: Projects submitted to COMAP18
US$ Million
Source: Uruguay XXI based on data from UNASEP
6.2. Foreign company investments
Many multinational companies have invested in renewable energy in Uruguay, in electricity
generation and in bio-fuel. Such foreign investments are carried out in an environment in
which foreign direct investment in Uruguay has multiplied by 11 since year 2002,
representing in 2010 5.8% of the GDP. Some of these companies are featured below:
UPM – Kymenne (Ex – Botnia Uruguay) (www.upmuruguay.com.uy)
With an investment of more than US$ 1.2 billion and processing capacity
of a million tons of eucalyptus pulp per year, Botnia Uruguay is the
largest production venture of Uruguay, starting operations in 2007. This
venture is mainly owned by Finnish company UPM-Kymmene Oyj, one of
the world’s largest paper producers, and includes 180,000 hectares of land in Uruguay.
The plant uses the waste dissolved in cooking liquor, and in some cases also scraps
wood, to generate electric power exceeding its own consumption, and surplus is then
sold to the network. In 2010, Botnia’s generation delivered to the network was 201 GWh,
which represented 0.4% of UTE’s total demand.
18
Source: Drafted by Uruguay XXI based on data from COMAP
18

20. Montes del Pl ata ( www.montesdelplata.com.uy)
Montes del Plata is a forestry company founded in 2009 in Uruguay. The company’s
objective is to produce cellulose pulp under a management philosophy based on efficiency
and sustainability. The company came about from the association of two of the most
notable forestry companies in the world: Arauco and Stora Enso. These companies,
consisting of Chilean and Swedish-Finnish capital, respectively, are equal partners in
Montes del Plata. Investment made by Montes del Plata is estimated in US$ 1.9 billion in
the plant and US$ 700 million in land approximately.
Montes del Plata manages 140,000 hectares of forested lands in the departments of
Colonia, Durazno, Flores, Florida, Paysandú, Río Negro, Rivera, Soriano and Tacuarembó.
77% of Montes del Plata’s plantations are comprised of Eucalyptus globulus, Eucalyptus
dunnii and Eucalyptus grandis while 23% are pine.
Montes del Plata pulp mill, that will start operating in 2013, will also generate its own
power, about 160 MW of clean and renewable energy, approximately 90 MW of which will
be used for internal consumption. The surplus (between 55 and 75 MW) will be transferred
to the national grid, which is equivalent to the average consumption of 200,000 households.
 Fenir ol S.A.
The project is an investment of approximately U$S 25 million and adheres to the Clean
Development Mechanism of the Kyoto Protocol. Electric energy production is achieved
based on forestry and rice waste. The company is owned by four business groups of
different origins: Conatel (electrical products), Tsakos (shipyard), Branaa (tannery) and
Secco (slaughterhouse). The company was awarded the tender for up to 8.8 MW and
the contract is for 14 years.
ALUR (www.alur.com.uy)
The private-public partnership produces ethanol from sugar cane in order to supply the
domestic market. By January 2012, gasoline should have a minimum 5% of ethanol
(currently contains 2%). ALUR plans to reach and exceed that goal. Additionally, 12
MW/hour will be produced to cater for the plant needs. The surplus will be sold to UTE. The
cogeneration of electric energy will enable ALUR to sell 4 MW/h of energy to UTE in the
19

21. first stage (followed by 8 MW/h) during sugar cane harvest time. ALUR planned an incentive
program to increase the sunflower sown area intended for the biodiesel production project.
This plan will be implemented together with different producer organizations at an
individual and company level.
Weyerhaeuser (www.weyerhaeuser.com)
Weyerhaeuser, a U.S.-based company, is one of the largest forestry and wood companies in
the world. It has operations in 13 countries and employs over 18,000 people worldwide.
The company has 143,000 hectares of forested area distributed
as follows: 78,500 in Rivera-Tacuarembó and 64,500 in Cerro
Largo-Treinta y Tres. To date, it has invested in Uruguay more
than US$ 450 million (US$ 200 million in lands and plantations, US$ 150 million in works
and US$ 100 million in I+D). The company has an energy cogeneration plant fed by by-
products of its own production process. The plant’s generation capacity is 12 megawatts
and the company’s consumption needs are between five and six megawatts. The
remainder can be sold to the state-owned electricity distribution company.
Kentilux S.A.
Kentilux S.A. is a wind energy generation company which built the “Magdalena” wind farm
in the department of San José. The wind farm transfers energy to the grid since May 2011
and has a 10 MW capacity that contributes to the country's total installed 43 MW by June
2011. Currently, the wind farm is in the process of increasing power generation capacity,
aiming to install 20 MW by year 2013.
Fingano S.A.
Fingano will build a wind farm in Sierra de las Animas area, in the north region of
Maldonado. UTE will purchase energy generated by this company in the farm for a period
of 20 years. The total installed capacity of the project is of 50 MW, which means that the
energy generation equals the consumption of approximately 51,000 Uruguayan
20

22. households, which makes it the largest wind energy project to ever be carried out in
Uruguay.
Appendix 1
National and foreign investment promotion regulations
Foreign investors enjoy the same benefits as national investors and do not require prior
authorization to get installed in the country.
Law 16,906 (dated January 7, 1998) declares the promotion and protection of domestic and
foreign investment is of national interest. The current investment regulatory decree came into
effect on 10/01/201219.
By virtue of this Law and investment projects in any sector of activity submitted and promoted
by the Executive Branch, up to 100% of the amount invested may be computed as partial
payment of Corporate Income Tax (IRAE), depending on the type of project. Corporate income
tax rate is 25%. In addition, moveable fixed assets and civil works are exempt from wealth tax
and VAT (Value Added Tax) can be recovered for purchases of materials and services for the
latter.
Trade agreements and investment protection
General trade agreements
Uruguay has been part of the World Trade Organization (WTO) since its creation in 1995 and is
part of the Latin American Integration Association (ALADI, 1980) along with nine other South
American countries, Cuba and Mexico.
In the framework of ALADI, the Southern Common Market (MERCOSUR) was formed in 1991
with Argentina, Brazil and Paraguay. MERCOSUR became a customs union in 1995 with the free
movement of goods, the elimination of customs duties and non-tariff barriers between
countries and a Common External Tariff for countries outside MERCOSUR. Venezuela is currently
in the process of joining MERCOSUR.
Moreover, in the framework of ALADI, MERCOSUR has signed trade agreements with other
South American countries: Chile (1996), Bolivia (1996), Colombia, Ecuador and Venezuela
(2004), India (2004) and Peru (2005), Israel (2007), all of which form respective Free Trade Areas
with tariff reduction schedules that should be completed no later than 2014/2019, according to
the country.
19
Available at: http://archivo.presidencia.gub.uy/sci/decretos/2012/01/mef_705.pdf
21

23. Uruguay also signed a bilateral free trade agreement with Mexico (2003) which has enabled the
free movement of goods and services between both countries since June 2004, with certain
exceptions that end in 2014.
Investment protection agreements
Uruguay has signed investment protection and promotion agreements with 27 countries,
including Spain, the U.S., Finland, France and the U.K.
Appendix 2
Installed power and generated energy
Chart No. 5. Wind Installed Power (MW) Chart No. 6. Generated Wind Energy (GWh)
Chart No. 7. Biomass Installed Power (MW) Chart No. 8. Biomass Generated Energy (GWh)
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24. Chart No. 9. Solar Thermal Installed Power (MWth) Chart No. 10. Solar Thermal Source Generated
Energy (GWh)
Chart No. 11. Solar Photovoltaic Installed Power Chart No. 12. Solar Photovoltaic Source Generated
(Kwp) Energy (MWh)
Chart No. 13. Hydraulic Installed power (MW) Chart No. 14. Hydraulic Generated Energy (GWh)
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25. Regulatory Framework
- Decree 354/009: Tax incentive regime specific for the renewable energy sector
Article No. 1 declares the following activities promoted:
a) Electric energy generation that comes from non-traditional renewable sources.
b) Electric energy generation through cogeneration.
c) Energy resources production from renewable sources.
d) Solar to thermal energy conversion
e) Equipment conversion and/or process incorporation, intended for efficient use of
energy.
f) Mineral prospecting and exploration according to Law 5,242.
g) Services rendered by Energy Service Companies (ESCOs) registered with DNE and
qualified as category A.
h) National machinery and equipment manufacturing intended for use in the
aforementioned activities.
Includes IRAE exemption when electric energy is sold in the forward contract market,
based on the following schedule:
- 90% of the income, between 1/07/2009 and 31/12/2017
- 60% of the income, between 1/01/2018 and 31/12/2020
- 40% of the income, between 1/01/2021 and 31/12/2023
- Law 18,585, 18/09/2009: solar thermal energy promotion
This Law is in line with the strategic guidelines in the energy sector at national level
mentioned in the previous chapter, particularly with the directive axis that refers to the
diversification of the National Energy Matrix with the aim of reducing gasoline reliance
and increasing its strength by promoting integration of native sources in general and
that of non traditional renewable sources in particular. In article 1 the intention is to
stimulate the development of this technology by declaring investigation, development
and training in the use of this resource of national interest.
The Law mentions different sectors in which the incorporation of this technology will
become mandatory. Articles 3, 4, 5, 6, and 7 mention intended areas for inclusion:
o New public buildings
o Hotels (new buildings or under restoration)
o Sports clubs (new buildings or under restoration)
o Health care centers (new buildings or under restoration)
o New industrial or agro-industrial enterprises
o Heated swimming pools (new facilities or those to be converted to heated)
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26. It also declares tax benefits for the development of necessary investment in
manufacturing, implementation and usage of this technology (articles 2 and 12). These
benefits include tax exemptions – in the Investment Promotion Law No. 16,906
framework, exemption from import taxes and fees, return of VAT when equipment is for
domestic use, sports clubs and social organizations and manufactured nationally.
Another aspect included in the Law (article 11) is the coordination of a program to
promote easier access to solar energy technology. Coordination is carried out by
Ministry of Industry, Energy and Mining, Ministry of Social Development and Ministry of
Housing, Planning and Environment. This article also establishes the possibility of
participation for all industry related institutions, companies and organizations. Decree
451/011 December 19, 2011 establishes the implementation of Law 18,585 and intends
to be a contribution to the new stage that the passing of the aforementioned Law has
initiated in the development of Solar Thermal Technology in Uruguay.
- Decree Nº 173/010 June 1, 2010: authorizes subscribers connected to the low
voltage distribution grid to install renewable energy generation systems using sources
such as wind, solar, biomass or micro hydro.
Micro generation is carried out mainly in places with no access to the electrical grid,
however micro generation solutions are also being implemented with grid connected set
ups (UTE). There are two main aspects in micro generation, one is the possibility of
generating electricity to meet the demand (in full or in part) of electrical energy, and the
other is the possibility to send into the electricity grid the surplus of generated energy,
sell the energy to UTE.
Concerning the sale of surplus energy to UTE, approval is required to be able to carry out
the energy exchange. A connection agreement with UTE will have to be executed in
advance. Compliance with the general standards and conditions set by MIEM, and with
the low voltage interior wiring regulations by UTE (amended to deal with these
situations) is also a requirement. UTE will purchase all the energy fed to the grid at the
current price in UTE pricing list, on a 10-year contract term.
There are two types of taxpayers: the first one includes companies that generate
Corporate Income Tax (IRAE). These companies should be registered as UTE suppliers
and the energy fed into the grid will be charged VAT (IVA) at basic rate, UTE will act as
withholding agent for 60% of such VAT, not withholding Personal Income Tax (IRPF), not
for these cases. No invoice is required, nor is registering with the Internal Revenue
Services (DGI). The earned income will only be taxed Personal Income Tax (IRPF) at a
rate of 12% with UTE acting as withholding agent. In the case of a credit balance for the
client, UTE will process payment on a regular basis.
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27. It is also necessary to comply with town planning and environment regulations issued by
the Municipalities and National Environment Bureau (DINAMA), such as: construction
permits, height restrictions in residential areas, among others. Installation insurance will
provide peace of mind regarding the investment. The aforementioned can be of two
types: Equipment damage or liability insurance.
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28. Appendix 3
Main sector-related institutions and a gencies
Ministry of Industry, Energy and Mining (MIEM), www.miem.gub.uy
National Board of Energy (DNE) www.dne.gub.uy
Wind energy program in Uruguay (PEEU) www.energiaeolica.gub.uy
Energy Efficiency Project www.eficienciaenergetica.gub.uy
Regulatory Unit (URSEA) www.ursea.gub.uy
Electricity Market Administration (ADME) www.adme.com.uy
School of Engineering www.fing.edu.uy
School of Chemistry www.fq.edu.uy
School of Architecture www.farq.edu.uy
UTE www.ute.com.uy
ANCAP www.ancap.com.uy
Alcohols of Uruguay (ALUR) www.alur.com.uy
National Environment Bureau (DINAMA) www.dinama.gub.uy
National Land Planning Bureau (DINOT) www.dinot.gub.uy
Uruguayan wind power association (AUDEE) www.auee.com.uy
Mesa Solar www.mesasolar.org
Cámara Solar www.camarasolardeluruguay.com.uy
Uruguayan Association of Private Electric Energy Generators (AUGPEE) www.augpee.org
Private Sector Support Unit (UNASEP) www.unasep.gub.uy
National Development Corporation (CND) www.cnd.gub.uy
National Investigation and Innovation Agency (ANII) www.anii.gub.uy
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29. Facts about Uruguay
Uruguay at a glance (2010) 20
Official name Oriental Republic of Uruguay (República Oriental del Uruguay)
Location South America, bordering Argentina and Brazil.
Capital city Montevideo
2
176,215 km . 95% of its territory is productive land fit for farming
Surface area
exploitation
Población (2010) 3.3 million
Population growth (2010) 0.35% (annual)
Per capita GDP (2010) US$ 11,996.
Currency Uruguayan peso ($)
Literacy index 98%
Life expectancy at birth 77 years
Form of government Democratic republic with presidential system
Political division 19 departments
Time zone GMT - 03:00
Official language Spanish
Main economic indicators 2005 -2010
Indicators 2005 2006 2007 2008 2009 2010
GDP (Var % per year) 7.5% 4.3% 7.3% 8.6% 2.6% 8.5%
GDP (in millions of USD) 17,398 19,823 23,902 31,177 31,322 40,265
Population (in millions of people) 3.31 3.31 3.32 3.33 3.34 3.36
GDP per capita (USD) 5,263 5,981 7,191 9,351 9,364 11,996
Unemployment rate – Annual Average (% 12.20% 10.90% 9.20% 7.70% 7.30% 6.80%
labor force)
Exchange Rate (UYU/USD, Annual Average) 24.4 24.0 23.4 20.9 22.6 20.06
Annual)
Exchange Rate (Annual Average Variation) -1.56% -2.50% -10.65% 7.73% -11.12%
Consumer Prices (Var % annually 4.90% 6.38% 8.50% 9.19% 5.90% 6.93%
accumulated)
Exports (in millions of USD), goods and 5,085 5,787 6,933 9,372 8,647 10,666
services (1)
Imports (in millions of USD), goods and 4,693 5,877 6,775 10,333 7,957 9,875
services
Commercial Surplus/Deficit (in millions of 393 -90 158 -961 690 791
USD)
20
Sources: Data referred to GDP were gathered from IMF; foreign trade, FDI, exchange rate, International Reserves
and External Debt data were gathered from BCU; population growth rates, literacy, unemployment and inflation rates
were gathered from National Statistics Institute.
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30. Commercial Surplus/Deficit (% of GDP) 2.3% -0.5% 0.7% -3.1% 2.2% 2.0%
Global Fiscal Result (% of GDP) -0.4% -0.5% 0.0% -1.5% -1.7% -1.1%
Capital gross formation (% of GDP) 17.7% 19.4% 19.6% 22.3% 17.2% 17.9%
Gross Debt (% of GDP) 80.2% 69.2% 68.3% 53.0% 69.9% 57.2%
Direct Foreign Investment (in millions of USD) 847.4 1,494 1,330 2,106 1,593 2,358
Direct Foreign Investment (% of GDP) 4.9% 7.5% 5.6% 6.8% 5.1% 5.9%
Investor Services
About us
Uruguay XXI is the country’s investment and export promotion agency. Among other functions,
Uruguay XXI provides free support to foreign investors, both to those who are in the process of
assessing where to make their investments and those who are currently operating in Uruguay.
Our Investor Services
Uruguay XXI is the first point of contact for foreign investors. Our services include:
Macroeconomic and industry information. Uruguay XXI regularly prepares reports on
Uruguay and the various sectors of the economy.
Tailored information. We prepare customized information to answer specific questions,
such as macroeconomic data, labor market information, tax and legal aspects, incentive
programs for investment, localization and costs.
Contact with key players. We provide contacts with government agencies, industry
players, financial institutions, R&D centers and potential partners, among others.
Promotion. We promote investment opportunities at strategic events, business missions
and round tables.
Facilitation of foreign investor visits, including organization of meetings with public
authorities, suppliers, potential partners and business chambers.
Publication of investment opportunities. On our website, we periodically publish
information on investment projects by state entities and private companies.
29