Uruguay is making progress in designing new contracts to incorporate private capital into the next renewable energy expansion , but the formula will not replicate the PPAs that underpinned the wind and solar deployment of the past decade.
The final structure is still under discussion. The government is analyzing alternatives that could maintain some elements of the Power Purchase Agreements or directly adopt a different contractual format, at a time when UTE plans to reach 500 MW of new solar photovoltaic capacity by 2030 and reserve part of that expansion for private developers.
“There are many things we wouldn’t repeat or that we would modify. So, without a doubt, the contracts, even if they are PPAs, would be different. Perhaps they won’t be exactly a PPA in this next call for bids,” stated Arianna Spinelli , National Director of Energy, in an interview with Energía Estratégica during the XII LATAM Renewables Congress .
The contract redesign accompanies the decision to incorporate private participation in part of the new solar expansion . Both the National Energy Directorate (DNE) and the state-owned electricity company (UTE) suggest that the new framework should review the logic of previous contracts and more explicitly recognize the various components that support the new investments.
“We are thinking about the development of generation with new contracts that somehow contemplate everything that renewable energy has in itself: energy and network services,” said Andrea Cabrera , president of UTE, during her presentation at the Congress.
From MWh to infrastructure and services
The discussion starts from a substantially different matrix than the one in which the first PPAs were structured.
“A low spot price is not what will trigger future investment decisions because they would not be remunerated at that price,” stated the president of UTE.
The company is working on schemes that make fixed costs explicit and include additional benefits beyond energy supply, a logic that also extends to storage systems.
As previously reported by Energía Estratégica, UTE is evaluating tenders in which the private sector assumes the development of the power plant and receives compensation for a specified period , with alternatives that could include the subsequent transfer of the asset to the public company.
The scheme would entail the return of private developers with a broader role in Uruguay's photovoltaic expansion.
The contract is still open to changes.
Spinelli emphasized that there is still no defined model.
Months ago, the DNE put the general outlines of the scheme to private actors for consideration and received comments that are now being evaluated.
“The exact type of contract is not yet finalized. What we put forward a few months ago were the general outlines. We received input from the private sector and we are analyzing it,” he said.
One of the criteria that will determine the final formula will be the economic impact on the system.
“What we don’t want is for a new contract to increase the final price,” the director stated.
The review, he added, also incorporates the experience of the contracts that accompanied the first transformation of the parent company: "There are many things that we would not repeat or that we would modify."
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Therefore, the discussion is not limited to modifying some clause of existing PPAs. The DNE is evaluating what risks each party assumes, what services are remunerated, and what structure allows for mobilizing investment without passing on additional costs to the end user .
More responsibility for the developer
UTE's presentation also left clues about the role that the private investor will play.
The public company proposes that the developer be able to assume the design, construction, operation and maintenance , in addition to maintaining ownership of the infrastructure for a certain time horizon.
“They are the ones who know how to manage the risks of their own activity,” Cabrera said.
UTE would, in parallel, retain its role as the coordinator of the electrical system and responsible for guaranteeing the infrastructure, backup and reliability necessary to integrate the new power plants.
The distribution of risks and benefits also comes up in the contractual discussions. The company believes that both variables should be shared among the parties involved in the new developments.
The network will also define the contracts.
Solar expansion does not depend solely on the economic model. UTE acknowledges that the transmission network used during the first transformation of the energy mix is under increasing strain and that the new capacity will need to be coordinated with planned transmission investments.
The Master Plan includes a third 500 kV corridor , intended to strengthen the connection between the center and the south of the country and enable both new generation and large consumption, including hydrogen projects and data centers.
Until that infrastructure is available, the existing capacity will determine the location, power and characteristics of the first private projects , a factor that UTE has already incorporated into the design of its upcoming calls for proposals.
The company also has its own solar projects at various stages of development and has open tenders to expand its generation capacity, while preparing the ground for deeper private investment. Its current Strategic Plan confirms that the integrated expansion of generation and transmission will be a central focus in the coming years.
The call, towards the end of 2026
Spinelli placed the next call for private developers towards the end of 2026 , although he clarified that it will first be necessary to agree on the contractual engineering with different State agencies.
The deadline coincides with the roadmap that UTE has been using to announce new projects with private investment before the end of the year.
But the calendar is no longer the main unknown.
The discussion shifted to what rules Uruguay will use to invite private developers again after an initial renewable energy transformation based heavily on long-term power purchase agreements.
The next expansion aims for a different logic: to remunerate infrastructure and services, make fixed costs transparent, better allocate risks, and take advantage of a network that today presents different constraints.
The PPA (Power Purchase Agreement) has not yet been ruled out as a contractual arrangement. What is certain, according to the DNE (National Energy Directorate), is that if it is used again, it will not be the same as in the first wave of renewable energy projects .