After posting a story about clean energy in Uruguay, we received some interesting info from German-based Spirea GmbH, a boutique cleantech advisory firm from Berlin. This company is facilitating the development of green technologies in the emerging markets of Asia, Latin America, and the Middle East.
Its technical operations specialist, Laurie Lawrence, pointed out that Uruguay has excellent solar resources, comparable even to Spain. Spirea has consulted with the German Energy Agency on a program to promote renewable energy and spread German technology into developing countries like Uruguay.
Spirea’s consulting role involves promoting decentralized solar PV applications in Uruguay, said Lawrence. “This year we have set up two pilot projects, one is an experimental PV system with micro inverter at University of Republic in Montevideo, the other one is a ground system at a dairy farm ‘Talar’ which we are installing this week.”
Although these are small demonstration systems, Spirea hopes its efforts will generate more interest from both domestic and foreign players concerning Uruguay’s residential & commercial sector. This seems to be particularly relevant and timely as solar costs continue to decline.
At an event held earlier in Montevideo at the University of the Republic, the German Energy Agency and Spirea GmbH sponsored an experimental photovoltaic system. Here, speakers, including faculty dean Prof. Dr. Simon, director of the electrical institute Prof. Dr. Silveira, and German embassy counselor Dr. Teepe, each pointed to the progress Uruguay has made in turning its electricity green, solar having a central part in this transformation.
According to Spirea, continuously declining system costs have already made solar energy the most competitive energy source (including both renewable and non-renewable energy sources), making Uruguay one of the global front-runners in this development.
“With its proactive approach in promoting renewable energies, including hydropower, solar and wind, Uruguay has achieved a remarkable renewable share of the electricity supply of over 90%, mainly due to its hydroelectric power and recently installed Eolic parks. With this progress Uruguay is also the global front-runner in transforming its economy into a low carbon economy. Compared to 2009 Uruguay has pledged at the United Nations climate talks to cut its emission level by 2017 by over 88%.”
“The country’s huge clean power generation potential through decentralized solar PV system from both private households and small commercial businesses has not yet been exploited,” said Maria Simon, PhD, dean of engineering faculty at University of Republic. She pointed to available tax incentives, adding that decentralized solar systems can in some cases be used to significantly reduce electricity costs.
According to Spirea, a fast rollout of decentralized PV solutions in Uruguay depends on these three key factors, starting with the money side:
- Innovative financing programs — For most private Uruguayan households, it is not affordable to install a solar system with upfront payment. There’s no pre-approved credit scheme available on the market for residential PV system, like the ones for a thermal solar system. The same applies for commercial users who have to rely on conventional bank loans that weigh heavily on their balance sheets due to the high lending rate. Standardized, pre-approved installment platforms will make decentralized PV system much more attractive for low-tension users in Uruguay.
- Long-term vision of utility company — Despite the regulator’s efforts to introduce a net-metering mechanism and international PV tenders, Uruguay’s government-owned power generation & transmission company UTE is still behaving like a short-sighted monopoly player. Its future can already be seen in Germany and the USA, where vertically integrated players are continuously losing end-customers to innovative new entrants such as SolarCity. The tipping point for Uruguay may be a few years away, but the monopoly position of UTE can definitely not hold the tide back once it makes more economic sense for end users to install their own solar panels and battery systems.
- Economy of scale — In the long run, the learning effect and market competition will ultimately drive the prices of PV systems down in the country, as we have seen in Germany. Nevertheless, as a young industry in Uruguay, the installation and connection cost is still at the higher end for most decentralized low-tension PV systems. High cost means fewer customers and a smaller cake for all market players. One potential solution to the dilemma is to bring in experienced foreign solar companies and investments from outside the country.
“By utilizing its rich hydro, solar and wind resources and becoming one of the first 100%-renewable countries in the world, Uruguay can once again show its leadership and function as a global role model in combating the climate change. Decentralized solar PV system will play an essential role in Uruguay’s strategic road-map towards a zero-emission power supply matrix. The bottlenecks faced by the young market shall be unlocked by joint efforts of regulators, local entrepreneurs and international players. Backed by one of the most stable and strong-growing economies on the continent, the untapped residential and commercial PV market in Uruguay represents a brilliant opportunity for global businesses and investors.”
As for Spirea’s Uruguay projects, Lawrence said, “Although these are all very small systems, we hope the efforts could bring more interests from both domestic and foreign players to the residential & commercial sector in the country.”
We do, as well.
Image via Spirea GnbH