Uruguay is working on a comprehensive reform of the microgeneration regime that would begin to be applied in 2027. The new scheme would maintain self-consumption, but would incorporate a charge to cover network and backup costs, while the energy injected would no longer be paid according to the retail tariff and would instead be based on the spot price of the electricity market .
The technical proposal would offer two alternatives: migrating to the Subscriber with Generation plan, which separates the costs associated with supply, or maintaining the current tariff and paying a charge for the energy produced and consumed within the facility. For surplus energy, a UTE product that stabilizes the price and facilitates project financing is also being analyzed.
“A new decree will soon be issued that will clearly outline how we will proceed from 2027 onwards. There will be new conditions for new projects,” anticipated Arianna Spinelli , National Director of Energy, in a dialogue with Energía Estratégica within the framework of the XII LATAM Renewables Congress .
The official made it clear that the incentive scheme designed more than a decade ago will be reviewed. “Currently, centralized generation is the most efficient for the system. Therefore, subsidizing distributed generation is a questionable principle,” she stated.
The official assessment begins with the premise that the conditions of the electricity system have changed substantially since 2010. At that time, one of the main reasons for promoting microgeneration was its potential to displace fossil fuel generation. Currently, with a virtually renewable electricity mix, the DNE (National Energy Directorate) understands that distributed generation largely replaces renewable energy with renewable energy , so that argument has lost its weight.
“It’s not the same situation Uruguay had in 2010, when we had nothing and needed everyone to contribute. Today it’s not as necessary to promote it in the same way,” Spinelli explained.
The two subsidies that the DNE seeks to eliminate
During the event organized by the Uruguayan Renewable Energy Association (AUDER) , Wilson Sierra , advisor to the National Energy Directorate (DNE), explained that the current system contains two subsidy components .
The first is related to self-consumption. Part of the costs of the electricity grid and backup power are collected through the energy component of the tariffs and not exclusively through fixed charges.
When a user installs solar panels and reduces their consumption, they also decrease their contribution to those costs, even while maintaining the connection, infrastructure, and system backup.
“The idea is that self-consumption will continue, but with the added costs,” Sierra said.
The reform would not modify the payment for contracted power or the tariff applied to electricity withdrawn from the grid. The change would affect self-consumed energy, which would begin to be subject to a specific charge.
According to the proposed scheme, this value would arise from the difference between the energy component of an energized tariff and the corresponding component of a de-energized tariff . In this way, the microgenerator would help cover the costs it currently forgoes by reducing its electricity purchases.
The surpluses would no longer be paid at the retail value
The second component identified by the DNE is in the remuneration of surpluses.
Decree 173/010 established a system whereby the energy injected into the grid receives a value linked to the tariff contracted by the user. However, this price includes components intended to remunerate the grid, backup power, and other costs that do not strictly correspond to the value of the electricity generated.
According to Sierra, this mechanism can lead to paying four to six times more for the injected energy than a generation plant could receive on the market . This difference is ultimately covered by the other subscribers.
The proposal is that surpluses will be remunerated using the hourly spot price as a reference.
However, the DNE acknowledges that directly exposing small projects to market volatility can hinder their bankability. Therefore, two approaches are being analyzed.
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One option would be to charge the spot price directly for each hour. The second would be to contract a commercial product offered by UTE , designed to stabilize that income and provide a more predictable benchmark for financial institutions.
The design of that product is still in the process of being defined.
Two tariff alternatives
The new regime would not impose a single modality for all microgenerators.
The first option would be to enter the Subscriber with Generation scheme, which differentiates the tariff components and allows for a more precise allocation of network, energy and backup costs.
According to Sierra, this alternative would be convenient for users with a high utilization factor , but could harm installations with less utilization of the contracted power.
To avoid this situation, the DNE incorporated a second option: maintain the current rate for energy consumed from the grid and add the new charge corresponding to self-consumption.
The suitability of each system will depend on the consumption profile, the contracted power, the generation volume and the hourly behavior of each installation.
Transition for existing facilities
The new conditions would apply to projects entering the regime from 2027 onwards. For existing facilities that have completed the ten years of benefits initially planned, the Government projects a gradual transition.
“We are going to look for a gradual approach so that they go through a process of getting closer to the new concept over several years,” Spinelli explained.
The DNE still needs to define the duration and conditions of that period. Sierra indicated that the premise is for the change to be “ orderly, thorough, and smooth ” and allow progress toward a more balanced tariff system.
Batteries and tax benefits
As a counterpart to the closure of the subsidized regime, the proposal would open up new commercial opportunities for the sector.
One of them would be to lift the restriction that currently limits the incorporation of batteries in microgeneration facilities .
According to the DNE, if the activity begins to operate under conditions that reflect the real costs of the system, there would no longer be grounds to prevent the storage associated with these projects.
The enablement would allow for managing surpluses, shifting consumption, and choosing with greater flexibility when to withdraw or deliver electricity to the grid.
Furthermore, by leaving behind the specific scheme of Decree 173/010, projects could regain the possibility of being presented to the Investment Law Application Commission (COMAP) to access tax benefits.
The DNE believes that both tools could lay the foundations for a new stage of distributed generation , with incentives linked to investment and innovation, but without passing on the tariff differences of the current system to the rest of the users.
The design is still a proposal from the technical departments and has not yet received final approval . However, it establishes the direction of the upcoming decree: to maintain microgeneration and self-consumption, but to progressively eliminate implicit subsidies and bring the activity closer to the rules of the electricity market.