Due to drought and energy demand from Brazil, Uruguay has highest record in thermal power plants since 2012

RIO DE JANEIRO, BRAZIL – Due to a “strong drought” and “increased demand” from Brazil, also due to the lack of rainfall in its territory, Uruguay increased, in 2021, its energy production employing thermal power plants – the most polluting method – “three times compared to 2020 and 5.8 times compared to the average of the previous five-year period”.

The use of this type of source in the electricity matrix “reached 17.4%, the highest record since 2012”, according to a report by the consulting firm SEG Ingeniería based on data from UTE.

“In 2021, electricity generation in Uruguay was 82.6% renewable, the lowest share since 2012,” says the report released on Twitter, which adds that the electricity generation matrix was distributed as follows with annual data closed: 35.4% wind, 36.7% hydro, 17.4% thermal, 7.3% biomass and 3.1% photovoltaic. In addition, the publication highlights that “the drought affecting the country since 2020 places the biennium [together with 2021] as the one with the lowest generation and participation of hydroelectricity in 18 years”.

But the water was not the only element that showed less presence in the year. “For the first time since its incorporation into the generation matrix in 2008, wind power production fell in annual terms in 2021,” the report says.

Climatic factors also impacted Brazil, which had a power generation crisis and had to buy electricity from Uruguay at extraordinary prices. It resulted in profits for UTE and Ancap, which sells its diesel oil to power thermal power plants. These impressive revenues for the state oil company, estimated at 50 million dollars, were the reason presented by the government for not varying the price of fuels in the last months, despite the increase in crude oil prices.

According to the report with annual export data published by the state agency Uruguay XXI, electric energy was the sixth product that generated the most foreign currency for the country in 2021. It was the one that increased the most since 2020 [632%]. Excluding the last two-month period, when shipments to Brazil fell, 2,600 gigawatt-hours [GWh] were exported, more than double that in 2020 and slightly less than in 2019, when it was almost 3,000.

“Electricity exports reached US$594 million in 2021. This figure marks a solid increase compared to previous years because export prices in 2021 were much higher,” says the Uruguay XXI report.

In conversation with the daily, the director of SEG Ingeniería, Ernesto Elenter, stated that Brazil “depends a lot on hydroelectric energy” and that, therefore, the extreme drought it suffered in 2021 “really complicated its life”.

The vice-president of UTE, Julio Luis Sanguinetti, told the newspaper that the thermal power plants were turned on fundamentally to sell energy to Brazil. However, “in some peaks,” they had to be used “for national supply” since there was a “water drought” and also “wind drought”. Likewise, despite the increase in their use, Sanguinetti said that “the thermal system, with the new composition of the energy matrix, is strictly backup”.
“It pollutes as little as possible”.

Among the thermal power plants that UTE has is one inaugurated during the last period of government of the Frente Amplio (FA), which is located in the department of San José and is a combined cycle, therefore “pollutes as little as possible”. In this sense, Sanguinetti expressed that Uruguay is “within the parameters of sustainability” since “it is a case study for the change of matrix it has made”.

When asked about this, the president of UTE between 2010 and 2020, Gonzalo Casaravilla, told the newspaper that in 2019, when a similar volume of energy was exported, it was mostly made with renewable sources, something unfeasible in 2021 due to climatic factors. In turn, he stated that the production with fossil fuels obviously impacts the environment. Still, if analyzed “from the point of view of the region”, the emission would not have been “avoided” if Uruguay had not turned on its thermal power plants, since “Brazil would have used more inefficient machines” to produce the same energy.

“We have a combined cycle that improves efficiency from the point of view of the amount of [greenhouse gas] emissions associated with the energy generated,” said the former minister. In addition, he evaluated that by this, there is an “improvement” at a regional level; however, “from the local point of view one could say that Uruguay had higher emissions” compared to previous years, “because effectively the thermal regime has that consequence”.

However, Casaravilla emphasized that thermal power plants are not the main environmental problem in Uruguay, since “the main emission, but by far, is related to transportation, and even methane from agricultural production”, which means that “the contribution of the electricity sector does not change much”.

SEG’s Elenter considered that “accustomed to the fact that only 3% of electricity came from fossil fuels” in recent years, going to 17% “is quite a big jump”, but he assured that this must be weighed against what it meant for Uruguay “a business of hundreds of millions of dollars in profits” from sales to Brazil.

Regarding the improvement in export prices compared to 2019, Casaravilla pointed out that “that is due to Brazil’s demand” because of the shortage, but warned that “in these things, exitism is not useful; you have to know that the issue of interconnections, export, and import, is back and forth”. “Today, Brazil is in this situation, but in the future, it can be reversed”, he explained.

Meanwhile, Sanguinetti assured that the improvements in UTE’s numbers during 2021 are not enough to lower tariffs since these “are associated to the internal production cost, not to the income from abroad, which is extraordinary”. “I cannot make a budget on an extraordinary income from a market that I do not control,” he said about exports to Brazil.