In 2005, Uruguay initiated a dramatic shift in its energy strategy, moving from petroleum-based electricity generation to renewable sources. In 2024, Uruguay generated 99 percent of its electricity from renewable sources using hydropower (42 percent), wind (28 percent), and biomass (26 percent).
Uruguay receives an average 1,700 KW per square meter of sunlight a year, on par with Mediterranean countries although solar represents only a fraction of the country's total electricity production. Uruguay's Investment Promotion Law offers incentives for investing in solar manufacturing, systems implementation, and solar energy utilization.
Uruguay generally has a surplus of electricity due to excess wind-power installed capacity. The country seeks to identify additional domestic uses for excess electricity and potentially increase exports to Argentina and Brazil.
Uruguay is actively pursuing offshore oil exploration. The discovery of oil and gas in Namibia in early 2022 renewed the interest of international companies in Uruguay's territorial waters due to their geological similarities.
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