The Uruguayan economy has recorded notable growth in recent years bringing about a significant rise in energy demand both from household consumers and businesses. Although significant progress has been made in connection with energy infrastructure, energy demand is expected to rise alongside economic growth. In this regard, Uruguay faces the challenge of expanding in a sustainable and environmentally-friendly manner. This challenge offers interesting opportunities for developing investments in this sector. 

Since 2005, the country has been crafting government policy on energy with the objective of diversifying supply and increasing energy independence. These measures will help bring down the costs of average electric power generation, diminish the environmental footprint and generate greater percentages of autochthonous energy in the grid.   

As part of the strategy to generate sustainable productive development, Uruguay has issued standards promoting renewable energy enterprises. For example, government Decree 354/0096 grants specific tax incentives for this sector. This decree is comprised within the framework of the Investment Protection and Promotion Act that declares of national interest both domestic and foreign investment protection and promotion, which must be treated equally.

Another favorable aspect for developing renewable energy in Uruguay is the availability of natural resources. In addition to sizable watercourses, the country offers an interesting potential in the use of wind power, biomass and photovoltaic and thermal solar energy. In addition to these enterprises, further significant progress has been made with the development of biofuels, led by the public-private company ALUR.

In brief, government policy, a favorable regulatory framework and the availability of natural resources have contributed to the rise in renewable energy in recent years. This has generated an area significantly contributing to jobs and economic added value. The sector has committed a US$ 7 billion investment between 2011 and 2015, estimated to grow even more.  In 2015 the use of renewable energy is expected to account for 50% of the national power grid. Towards these ends, Uruguay will become the country with the highest percentage share of renewable energy of total power generation in Latin America.