Uruguay is nearing the world leader in wind and solar power by market share, Denmark, showing how the right grid conditions can help renewables sweep aside fossil fuel energy.

At the Institute of Energy Economics and Financial Analysis (IEEFA), we reported earlier this year that Uruguay was probably the world’s fastest growing variable renewables market, with wind and solar power reaching 32% of total generation in 2017, compared with 1% in 2013.

The small Latin American country is now nearing the market share of world leader Denmark.

In Uruguay, wind and solar exceeded 40% of total generation in seven of the first eight months of 2018. Denmark reached a corresponding value in six of the first eight months.

While Denmark has higher peaks of variable renewables market share, each summer, it also has deeper troughs during periods of higher electricity demand in winter (see Fig 1 below).

In Uruguay, year to date (Jan-Aug), wind and solar have reached 43% market share, up 12 percentage points on the same period last year. Denmark has reached 49% of net generation, down two and a half percentage points as a result of a less windy year so far.

It is no coincidence that Uruguay is managing such rapid wind and solar growth, with helpful network conditions favouring the integration of variable generation.

Like Denmark, Uruguay has interconnection with larger neighbours which allows it to export wind power surpluses. Uruguay has seen annual net exports along its interconnection to Brazil and Argentina every year since its rapid renewables growth started in 2013. The country saw annual net exports in only three of the 10 years before 2013.

Uruguay also has large installed hydropower capacity, which is the perfect complement to variable renewable generation, because of its flexibility.

But these are not essential conditions for variable renewables growth. Countries can increase the flexibility of their domestic generation in other ways, depending on their natural resources and infrastructure. For example, Denmark has achieved domestic flexibility by coupling national heat and power demand through a network of co-generation combined heat and power units.

Uruguay’s domestic oil-fired generation and hydro generation together have made way for its wind and solar growth. The country has thus achieved its main goals, to reduce dependence on oil and electricity imports, and to be better prepared for dry years.

Fig 1. Denmark monthly net generation by fuel source, 2009-2018 YTD

Fig 2. Uruguay monthly generation by fuel source, 2009-2018 YTD

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