Uruguay issues 99 MW solar tender and changes PPA rules for investors

Uruguay's national electricity utility, UTE, has issued tender P104220/2026 to procure power from three new solar plants with a combined injection capacity of 99 MW, structured through 20-year power purchase agreements.

The bidding process will accept proposals until 1:00 p.m. on January 27, 2027. The tender encompasses three independent projects, each rated at 33 MW, to be located in Tacuarembó, Florida, and the eastern region of the country.

The formal release of the tender documents marks UTE's return to contracting solar energy from new private developers, a shift following more than a decade during which the expansion of photovoltaic capacity was primarily driven by the state utility's own projects.

The announcement also resolves a key uncertainty that has accompanied the preparation of the call: the specific remuneration model Uruguay will employ to attract new investment without replicating the contract structures used during the country's initial energy transition.

As Energía Estratégica reported in August, the National Energy Directorate (DNE) was assessing various options, including availability-based payments, grid services, and a different allocation of risks between the buyer and developers.

“There are many things we would not repeat or would modify. So yes, the contracts, even if they are PPAs, would be different,” Arianna Spinelli, director of the National Energy Directorate, had stated during the XII LATAM Renewables Congress.

The final document confirms the use of power purchase agreements, with remuneration expressed in USD/MWh and additional obligations for providing electrical services included within the bid price.

How the new contractual framework will operate

A central element of the tender is the revenue structure established for the successful bidders.

For the initial 15 years, UTE will compensate for the generated energy based on the price bid by each developer. For the remaining five years, the compensation value will be calculated at 40% of the awarded price, subject to the corresponding adjustments.

The annual indexation formulas will incorporate both U.S. and Uruguayan price indicators, as well as exchange rate movements, with different weightings applied depending on the contractual phase.

Departing from the fixed-fee alternatives that were considered during the preparation of the call, the tender documents specify that monthly billing will depend on the contracted energy volume and the prevailing price.

The state utility will also acquire, through this compensation mechanism, the rights associated with firm capacity, ancillary services, night-time voltage regulation, and any other attributes that may be recognized for the plants.

“We are considering the development of generation through new contracts that, in some way, account for everything that renewable energy inherently entails: both the energy itself and grid services,” Andrea Cabrera, president of UTE, stated in July.

The agreement also includes compensation for energy that cannot be dispatched due to operational constraints. In such instances, the unmet generation, as determined under ADME procedures, will be remunerated at the same contractual rate.

This provision represents a key factor in assessing project revenues within a system that must integrate new renewable generation while simultaneously expanding its transmission infrastructure.

What changes compared to previous solar contracts

The new tender introduces changes from the 2013 photovoltaic contracting regime, which was established by Decree 133/013.

That previous framework provided for contract terms ranging from 20 to 30 years for large-scale plants and set a maximum price of USD 91.5/MWh for projects available before June 1, 2014, expressed in constant dollars as of January 2013.

In contrast, the current call for bids mandates a uniform 20-year term and awards contracts through a competitive process based on the lowest comparative price, with differentiated remuneration during the final five years of the contract.

Another modification concerns the fees for using the electrical grid.

While the 2013 regime exempted generators from paying distribution and transmission tolls for the duration of the contract, the current agreement explicitly states that these costs will be the responsibility of the developer.

Financing for grid connection infrastructure was already a mandatory obligation for private developers under the previous regulatory framework. The 2026 tender maintains this requirement and specifies that successful bidders will also bear the costs and indemnities associated with easements and land impacts.

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The new regulations will require bidders to account for both the revenue generated from electricity sales and the costs associated with grid connection, as well as the technical performance standards mandated during the operational phase.

Three zones, guarantees and requirements for the successful bidders

The tender is structured into three independent lots, each of which can be awarded separately.

The first lot targets the Tacuarembó region, with approved grid connections at Cuchilla Peralta A, Cuchilla Peralta B, and Chamberlain, all operating at 150 kV.

The second lot is designated for the Florida area, where potential nodes include Pintado A, Pintado B, Florida, Colonia Sánchez, and Durazno. Depending on the specific installation, these sites offer alternatives at either 30 kV or 150 kV.

The third project will be located in the eastern zone, with enabled connection points in Carapé, San Carlos, La Plata, and Rocha.

Each solar plant must position its point of connection within a maximum radius of five kilometers from the selected node and must utilize dedicated evacuation infrastructure.

Winning bidders will finance the necessary construction works. Upon completion and acceptance of these works, they will transfer the corresponding connection infrastructure to UTE at no additional cost. This transfer obligation does not extend to the entirety of the photovoltaic plant.

Within 60 days following the final award, the state utility will deliver the specific preliminary connection design, which will detail the required works for each individual installation.

Bidders are required to post a bid maintenance guarantee of USD 300,000 per project to participate in the tender. The maximum deadline for commissioning the solar plants is set at 24 months from the date of contract signing.

In the event of non-compliance, developers may request an extension of up to six months, subject to a penalty of USD 4,125 per day per solar park.

The tender excludes battery storage and leaves key provisions on domestic participation unresolved.

The tender documents mandate that the plants rely exclusively on solar photovoltaic technology, thereby excluding the integration of energy storage systems, wind generation, biomass, or any other power sources.

However, the facilities must be equipped to provide reactive power control services, including a feature known as Q at Night, which assists in voltage regulation during nighttime hours.

Simultaneously, UTE is considering the inclusion of criteria regarding the domestic content of the investment, with the final methodology to be detailed in a forthcoming circular.

This provision will be critical in shaping how the procurement of local suppliers and workers is encouraged within a bidding framework designed to secure competitive pricing.

For context, the 2013 regulatory regime required a minimum 20% domestic content in project investments. Current documentation, however, does not yet clarify whether this threshold will be maintained or replaced by an alternative methodology.

The tender, part of the expansion plan through 2030

The 99 MW allocation is part of a broader strategy through which Uruguay aims to integrate at least 500 MW of photovoltaic capacity over the next five years, leveraging a mix of state-led projects and private sector participation.

Fernanda Cardona, the minister of Industry, Energy and Mining, highlighted the urgent need to expand generation capacity, warning of the accumulated delay in bringing new power plants online.

“It is a strategic necessity for the country,” the official stated when referring to the expansion targets.

Planning efforts are also constrained by the available electrical infrastructure. The third 500 kV transmission corridor, designed to strengthen the connection between the central and southern regions of the country, will be a critical project for integrating additional generation and supplying new consumption demands.

Meanwhile, UTE continues to develop its own solar parks, such as Melo and Punta del Tigre, under investment and contracting frameworks that differ from the power purchase agreements (PPAs) established for the three new private projects.

With the final terms now published, the next phase of the process rests with the developers: determining how many firms will bid, what prices they will offer, and how they will integrate the technical obligations and risks set by UTE into their financial models.

The bid opening scheduled for January 2027 will reveal the market’s response to a procurement that brings private participation back into Uruguay’s solar development, albeit under rules that differ from those applied during the country’s first wave of photovoltaic expansion.