URUGUAY: FERTILE GROUND FOR OPIC-SUPPORTED GLOBAL RENEWABLE

UNCLAS MONTEVIDEO 000553

C O R R E C T E D COPY SIGNATURE

DEPT FOR WHA/EPSC FCORNIELLE AND FCOLON
PASS TO DEPT ENERGY - LEINSTEIN

SIPDIS

E.O. 12958: N/A
TAGS: ENGY UY
SUBJECT: URUGUAY: FERTILE GROUND FOR OPIC-SUPPORTED GLOBAL RENEWABLE
ENEGY INVESTMENT FUND

REF: Montevideo 401

--------------
SUMMARY
--------------


1. SUMMARY: Embassy Montevideo considers Uruguay fertile ground for
potential OPIC-supported Renewable Energy Fund investments.
Uruguay has a tremendous amount of potential in the field of
alternative energy and is already a regional leader in some aspects.
Several projects in both the private and public sector, especially
in the areas of bio-mass and wind generation, and bio-fuels
production are bringing the country closer to actually being able to
capitalize on its potential. END SUMMARY


2. The GOU is taking steps to ensure renewable energy plays a
central role in solving Uruguay's energy concerns. The current
government announced that it would aim to generate 500 megawatts, or
15 per cent of the country's electricity, from alternative sources
by 2015. In support of this ambitious target, the GOU launched a
sustainable energy policy designed to support the growth of the
sustainable energy sector. Under this program, the government
offered to grant tax exemptions and financial benefits of 10 to 20
years to private investors who produce renewable energy. As part of
this effort, in 2007, the state utility company UTE awarded tenders
for 36 megawatts worth of wind and biomass projects, one of them to
U.S. forestry company Weyerhaeuser. UTE currently plans to award
tenders to produce 150 MW through wind energy by the end of 2009.


3. Biofuels also represents a central pillar of the GOU's efforts to
increase the presence of renewable energy in the overall energy
matrix. Uruguay produces, or has plans to produce, both ethanol and
biodiesel, and has made an important regulatory commitment to
mandate the use of biofuels in the country. In November 2007, the
GOU passed a law regulating their production, commercialization, and
utilization. As a result, Uruguay has the legislatively mandated
target of a) a five percent ethanol/gasoline blend by 2015 and b) a
two percent biodiesel/ diesel blend by 2010 rising to five percent
by 2015.

--------------
U.S./ URUGUAY ENERGY PARTNERSHIP
--------------


4. Potential Renewable Energy Fund investment in Uruguay would
directly support the Alternative Energy and Energy Efficiency MOU
Uruguay signed with the U.S. in September 2008. Leading up to and
since the MOU was signed, Embassy Montevideo has pursued a series of
biofuels and alternative energy related initiatives with the GOU.
An OPIC-partnered project on biofuels was identified in reftel and
would represent an excellent vehicle to expand alternative energy
cooperation. It would also be a useful way to support U.S.
businesses seeking to sell their technology and energy products.
MATTHEWMAN