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Electricity in Uruguay: free generation, the wholesale market, UTE's grid, cross border trade and microgeneration

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Last verified: 2026-10-27 · Status: Stable

Anyone may generate electricity in Uruguay and sell it to third parties, as long as sales run through the national dispatch center under the wholesale market rules (Decreto Ley Nº 14.694 art. 2, wording of Ley Nº 16.832). Generators contract freely with distributors and large consumers, get non discriminatory access to spare grid capacity, and pay a dispatch fee capped at 2.5 percent; transmission and distribution remain a public service of the State utility UTE unless the Executive grants a concession. International interconnections and power contracts need Executive approval, nuclear power is banned, and small renewable systems on the low voltage grid can sell all injected energy to UTE for 10 years at the tariff energy price (Decreto Nº 173/010).

USD figures use UYU 40.21 per US dollar, the BCU quotation for DLS. USA BILLETE on 27 October 2026; amounts in Unidades Indexadas (UI) use UYU 6.6792 per UI, the BCU quotation for 27 October 2026; amounts in Unidades Reajustables (UR) use UYU 1,940.77, the September 2026 value published by IMPO (Decreto Nº 229/026), the latest available on 27 October 2026. Conversions are for orientation only.

Key facts

Electricity generation open to private agents	Yes; sales to third parties through the national dispatch and wholesale market Decreto Ley Nº 14.694 art. 2 (Ley Nº 16.832 art. 1), as of 2026-10-27 · in force
Cap on national dispatch fee	2.5 % of supply, export or transit amountLey Nº 16.832 art. 10, as of 2026-10-27 · in force
Third party access to spare transmission and distribution capacity	Mandatory and non discriminatory Ley Nº 16.832 art. 12, as of 2026-10-27 · in force
Executive approval of international interconnections and power contracts	Required Decreto Ley Nº 14.694 art. 5, as of 2026-10-27 · in force
Nuclear power	Prohibited Ley Nº 16.832 art. 27, as of 2026-10-27 · in force
UTE purchase obligation for microgeneration	10 years from commissioningDecreto Nº 173/010 art. 2, as of 2026-10-27 · in force
Microgeneration limit on low voltage without UTE consent	16 amperes (25 for single phase earth return)Decreto Nº 173/010 art. 1, as of 2026-10-27 · in force

The rule

1. Generation is excluded from the electricity public service: any agent may generate, including to sell all or part of its output to third parties on a regular and permanent basis, provided those sales go through the Despacho Nacional de Cargas and follow the wholesale market rules. Transmission, transformation and distribution are a public service when supplied to third parties regularly and permanently, and public service activities are under the Executive's technical and economic control; activities that are not a public service must still follow the technical rules issued by the competent authority.
Cost to do it: No generation licence fee is set by these articles; technical compliance costs depend on the project. Sales to third parties carry the dispatch fee described in the wholesale market rule below.
Example: A solar plant that sells its output to a factory must route the sale through the national dispatch; there is no separate statutory generation licence fee in UYU. / Same: no statutory licence fee in USD for generation itself.Decreto Ley Nº 14.694 (National Electricity Law), art. 2 as worded by Ley Nº 16.832 art. 1, Art. 1, 2 and 3, 1997-06-17 official text · verified 2026-10-27

2. The law creates a wholesale electricity market for generation and consumption with shared use of the transmission system and open access and competition to supply distributors and large consumers. Its agents are generators, transmitters, distributors and large consumers; the regulation sets the power and energy thresholds to qualify as a large consumer. Generators may sign supply contracts directly with distributors and large consumers, freely negotiated, and this also applies to UTE as generator and distributor. Transmitters and distributors must allow non discriminatory third party access to transport capacity not committed to contracted demand. Generators are paid for the energy and capacity sold in the market, calculated on net values delivered, and pay or charge for other system services. The market regulation was approved by Decreto Nº 360/002 of 11 September 2002.
Cost to do it: Market participation costs are set in the regulation and contracts, not in these articles; network use is paid at the maximum tariffs approved by the Executive (Ley Nº 16.832 art. 17).
Example: A wind farm can sign a 10 year contract with a large industrial consumer at a freely negotiated price in UYU or another agreed unit; the law does not fix the price. / The same contract may be priced in US dollars if the parties agree; the law leaves price terms to the parties.Ley Nº 16.832 (Energy Framework Law); Decreto Nº 360/002 (Wholesale Market Regulation), Ley Nº 16.832 art. 11, 12 and 16; Decreto Nº 360/002 art. 1, 1997-06-17 official text · verified 2026-10-27

3. The Administración del Mercado Eléctrico (ADME) is a non State public entity that runs the wholesale market and operates the national dispatch. Its board has five members: one appointed by the Executive (who chairs), one by UTE, one by the Uruguayan delegation to the Salto Grande Joint Technical Commission and two representing the other market agents. ADME is funded by the Tasa del Despacho Nacional de Cargas, charged on each transaction through the national interconnected system; the total of the fees may not exceed 2.5 percent of the supply, export or transit amount, the Executive sets the actual rate, and surpluses must be used to lower the fee. Dispatch must allow freely agreed contracts to be performed and dispatch remaining demand on an optimisation basis, and agents must accept the dispatch criteria to supply or receive non contracted energy.
Cost to do it: Dispatch fee: at most 2.5 percent of the transaction amount; the applicable rate is fixed by the Executive.
Example: On power sales of UYU 40,210,000 in a year, the dispatch fee cannot exceed UYU 1,005,250. / On US$1,000,000 of sales, at most US$25,000.Ley Nº 16.832; Decreto Ley Nº 14.694 art. 10 as worded by Ley Nº 16.832 art. 6, Ley Nº 16.832 art. 4, 5, 7 and 10, 1997-06-17 official text · verified 2026-10-27

4. UTE carries out the activities that form the electricity public service. The Executive, by express resolution and after hearing UTE, may grant the service in concession to other electricity companies, with exclusivity in the area assigned. The Executive, after reports from the national energy directorate and UTE, may authorise generation plants and transmission lines owned or operated by others to be integrated into UTE's interconnected system; interconnection and exchange conditions are agreed case by case with UTE and approved by the Executive. Public service suppliers must serve everyone who applies within their area and keep continuity, regularity and quality.
Cost to do it: Connection and interconnection terms, including who pays for grid works, are agreed with UTE and approved by the Executive; no fixed amount is set by law.
Example: A private transmission line built to evacuate a wind farm's output needs Executive authorisation to join UTE's system, with terms agreed with UTE. / Same in USD: the cost of the line and connection is project specific.Decreto Ley Nº 14.694, art. 6 (paragraphs 3 and 4 worded by Ley Nº 16.211 art. 26) and art. 7, Art. 6 and 7, 1991-10-01 official text · verified 2026-10-27

5. International electricity interconnections, and the related contracts to buy, sell or exchange power, must be approved by the Executive. On a reciprocity basis, the Executive may regulate international contracts between public or private companies, including the right to use existing transmission and distribution facilities at the maximum tariffs set under the law. Cross border power trade with Argentina or Brazil therefore needs Executive approval of the contract.
Cost to do it: No statutory approval fee; use of the grid for international contracts is paid at the approved maximum network tariffs.
Example: A generator wishing to export surplus power to an Argentine buyer must obtain Executive approval of the supply contract before performing it. / Same: approval is a condition, not a priced fee.Decreto Ley Nº 14.694 art. 5; Ley Nº 16.832 art. 13, Decreto Ley Nº 14.694 art. 5; Ley Nº 16.832 art. 13, 1997-06-17 official text · verified 2026-10-27

6. The Executive may set maximum tariffs for each activity of the electricity industry and may require companies doing more than one activity to report separate results for generation, transmission and distribution. Maximum tariffs for third party use of transmission and distribution networks must cover direct operating costs, depreciation of the assets used and a reasonable profit. Tariffs for sales to third parties by public service distributors are set by the Executive after hearing UTE and any concessionaires.
Cost to do it: Network tariffs are set by the Executive; the law fixes the cost recovery principle, not an amount.
Example: A large consumer buying from a private generator pays the generator's contract price plus the approved network tariff for use of UTE's grid. / Same structure in USD.Ley Nº 16.832; Decreto Ley Nº 14.694, Ley Nº 16.832 art. 15, 17 and 18; Decreto Ley Nº 14.694 art. 14, 1997-06-17 official text · verified 2026-10-27

7. The use of nuclear energy in Uruguay is prohibited. No wholesale market agent may sign electricity supply contracts with nuclear generators or with foreign generators whose plants pollute Uruguayan territory.
Cost to do it: Not applicable: the activity is banned.
Example: A trader cannot import power under a contract with a nuclear plant abroad. / Same: no USD amount applies.Ley Nº 16.832, Art. 27, 1997-06-17 official text · verified 2026-10-27

8. Subscribers connected to UTE's low voltage distribution network may install wind, solar, biomass or mini hydro generation. The maximum operating current generated in low voltage may not exceed 16 amperes (25 amperes for single phase earth return supplies) and peak power may not exceed the power contracted with UTE; larger systems need UTE's express prior consent and the subscriber pays any changes to the network. The microgenerator may exchange energy both ways with the grid, and UTE must buy all energy delivered for 10 years from commissioning, paid at the energy charge of the subscriber's own tariff (for the simple residential tariff, the 0 to 100 kWh band is replaced by the next band). A connection agreement with UTE must be signed first; the microgenerator pays no network use charges, pays for its own interior equipment and meter box adaptation, and a connection fee for the meter proposed by UTE and approved by the Executive. The decree took effect on 1 July 2010.
Cost to do it: No network use charges (art. 6); the subscriber pays interior equipment, meter box adaptation and the approved connection fee (art. 7 and 8). Equipment cost is project specific.
Example: A shop on a UTE low voltage tariff installs solar panels within its contracted power; every kWh it injects is paid by UTE at the energy charge of its own tariff for 10 years. / Same rule in USD: payment follows UTE's peso tariff, so dollar value moves with the exchange rate.Decreto Nº 173/010 of 1 June 2010, Art. 1 to 9 and 12, 2010-06-01 official text · verified 2026-10-27

Actor	Role	Legal basis
Executive (Ministry of Industry, Energy and Mining)	Energy policy, tariffs, concessions, approval of interconnections and cross border contracts	Decreto Ley Nº 14.694 art. 4, 5, 6 and 14
UTE	Public service of transmission and distribution; also generator; buys microgeneration	Decreto Ley Nº 14.694 art. 6; Decreto Nº 173/010 art. 2
ADME	Runs the wholesale market and the national dispatch, funded by the dispatch fee	Ley Nº 16.832 art. 4, 5 and 10
URSEA	Regulator for energy and water services	Ley Nº 17.598
Private generators	Free to generate and sell through the wholesale market	Decreto Ley Nº 14.694 art. 2
Large consumers	Wholesale market agents that may contract directly with generators	Ley Nº 16.832 art. 11

Who does what in Uruguay's electricity sector

Item	Rule
Eligible sources	Wind, solar, biomass, mini hydro
Size limit	16 A (25 A single phase earth return) and peak power up to contracted power; more with UTE consent
Purchase	UTE buys all injected energy for 10 years
Price	Energy charge of the subscriber's own UTE tariff
Network charges	None
Before connecting	Connection agreement with UTE

Microgeneration on UTE's low voltage grid (Decreto Nº 173/010)

Worked example

Dispatch fee ceiling: a private generator selling UYU 40,210,000 (US$1,000,000) of power in a year through the national interconnected system pays at most UYU 1,005,250 (US$25,000) in dispatch fees (Ley Nº 16.832 art. 10); the actual rate is fixed by the Executive.
Microgeneration: a business that installs rooftop solar within its contracted power signs UTE's connection agreement, pays no grid use charges and sells all injected energy to UTE for 10 years at its own tariff energy price (Decreto Nº 173/010 art. 2, 4 and 6).

Step by step

1. Choose the route: sale to third parties through the wholesale market (utility scale) or microgeneration behind a UTE low voltage supply.
2. Utility scale: set up the project company (see the entities pages), obtain environmental authorisation where required and register as a wholesale market agent with ADME.
3. Negotiate supply contracts with UTE, distributors or large consumers (Ley Nº 16.832 art. 11) and agree connection and interconnection terms with UTE for Executive approval (Decreto Ley Nº 14.694 art. 6).
4. For any export or import of power, obtain Executive approval of the interconnection and the contract before performing it (Decreto Ley Nº 14.694 art. 5).
5. Microgeneration: check the 16 ampere and contracted power limits, sign the UTE connection agreement and pay the approved meter connection fee (Decreto Nº 173/010 art. 1, 3 and 8).
6. Check the COMAP investment promotion regime for generation equipment on the investing pages.

Common traps

Selling power to third parties outside the national dispatch and wholesale market rules falls outside the generation freedom in Decreto Ley Nº 14.694 art. 2.
A subscriber may not supply third parties through branches of its installation without the distributor's authorisation (Decreto Ley Nº 14.694 art. 12).
Microgeneration above 16 amperes or above contracted power needs UTE's prior express consent, and the subscriber bears the cost of any network changes (Decreto Nº 173/010 art. 1).
Contracts with nuclear generators, or with foreign plants that pollute Uruguayan territory, are prohibited for every market agent (Ley Nº 16.832 art. 27).
Microgeneration payments follow UTE's peso tariff, so the dollar value of the 10 year purchase obligation moves with the exchange rate.

Sources

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