Solar energy: private companies request greater promotion and government evaluates project

The use of solar energy in Uruguay, although it has grown in recent years, continues to have an important duty in terms of its promotion. In this sense, while private companies linked to the sector demand improvements and request changes in the Law 16,906 on Investment Promotion, at Ministry of Industry, Energy and Mining (MIEM) a project is evaluated for exactly, promote the use of energy and promote plans in homes.

There are two types of solar energy that are the most widely used in Uruguay. On one hand the photovoltaic solar energy (ESFV) which is a type of renewable energy that is obtained from solar radiation to generate electricity and the MIEM defines it as “one of the technological alternatives with the most significant current development and with a promising future in the short term”. On the other hand there is the solar thermal energy (EST) It is a type of renewable energy that consists of the transformation of solar radiation into thermal energy or heat.

One of the great claims from the private sector is about the need to promote the use of solar energy in homes and also for small rural producers, which in turn will generate business growth. Fitzgerald Cantero, National Director of Energy of the MIEM, reported to The Observer that wallet is evaluating an internal analysis carried out by the Renewable Energies Area that aims to solve this problem.

Why the Solar Plan Failed

In October 2012 began the sun plan, a project spearheaded by UTE Y aimed at helping families purchase EST equipment which ended in February 2020.

Héctor Seco, sociologist at the University of the Republic (Udelar), together with other university professors such as Eliseo Cabrera, president of the Solar Chamber of Uruguay and expert in bioclimatic architecture, conducted an investigation called “Incorporation of the new modalities of obtaining energy in Uruguay: an analysis from the motivations that base these decisions”. In it, they studied the reasons why it is understood that the Solar Plan was a failure.

Dry said to The Observer that this plan had a developmentinsignificant” Y a “marginal effect”. In that sense, he indicated that the reasons on which work should be done are more of a “cultural”. “The consensus that exists today regarding renewable energy and its value has to connect with initiatives that make it viable”, he pointed.

The expert explained that the study carried out found that the sectors most likely to innovate in terms of the use of renewable energies they are upper middle class and upper class and with a certain cultural level. “They are a sector to which the incentives that the solar plan gave them made it easier for them to do something that they were going to do anyway“, He said.

In that sense, he argued that if what is aimed at is the use of solar energy in a massive way, it is necessary to provide “incentives that anticipate the risk and that are consistent with the expense that each family must incur”. “The Solar Plan was carried out alone by UTE with some support. It was not a public policy”, he added

Solar panels

In the year 2017 a was signed agreement between the MIEM, the Movement for the Eradication of Unhealthy Rural Housing (Mevir) and UTE with the aim of carrying out a program that allows the Successful incorporation of solar thermal equipment in Mevir homes, through the use of the Solar Fund. In this framework, solar thermal systems have been installed in 116 homes as of December 2019.

UTE also has two agreements with the Housing Cooperatives for Mutual Aid (Fucvam) and the Federation of Housing Cooperatives (Fecovi) through which it provides bonus for the incorporation of solar thermal systems to new cooperatives, to the first 4,000 teams, 2,000 in each federation of cooperatives.

Seco valued these initiatives but noted that they were “sporadic” and that it is necessary that they have “continuity and momentum”. “They cannot be isolated initiatives. One of the characteristics of public policy is that it has continuity, follow-up and closeness. Especially when it’s something new“, Held.

The position of the companies

For Carlos Lapido, general manager of Raycom – company dedicated to the development of solutions in communications infrastructure and energy systems – Residential use has not been reached because “There have been no benefits for families to have access to installing an ESFV system in their home”.

“There is no cooperation, a benefit from the State. For example, that there is a return, a certain percentage that can be used as a viable factor to justify an investment that ends up being significant for any household. A refund of part of the IRPF that is paid in each of the homes so that the fountain is attractive and the installation of these systems is promoteds”, he argued in dialogue with The Observer.

Alberto Fernández, partner of the company Kivoy SA – dedicated to the management and distribution of water with solar pumping – argued that the ESFV and the EST allow users to recover the investment made in a maximum of two years and that they give a great possibility of lower energy costs in homes and also for small rural producers.

However, he warned that the key is in the financing possibilities that can be provided and the importance of the role played by the State in this regard. “It is impossible for a retiree to access a solar thermal heater that costs between US$1,500 and US$2,000, so that is where the financing leg comes in and that is why public policies are necessary“, he pointed.

Solar energy: private companies request greater promotion and government evaluates project

Solar panels

According to Fernández, another of the great beneficiaries of solar energy would be agriculture, but he insisted again that small producers need financing and incentives. “We talk about 99.9% of Uruguay electrified but it is not a reality in the agricultural part. We have extensions of 300-400 hectares and more, but the electricity is in the house on the property, but There are no paddocks or where the animal is grazing and there it is impossible to go with two or three kilometers of UTE line because it is very expensive. A solar pump solves it, but there are producers who have credits, debts and cannot access this technology“, He said.

In this sense, the businessman highlighted the possibility that the companies will have to recover the investment and called the Republic Bank (BROU) to to be “banner of financing for small producers” with “accessible credits for 25 years as Australia and New Zealand did”.

Modifications to the Investment Law

According to businessmen, in recent years there has been a disincentive to the use of solar energy, in part because of changes made by the government to the Law 16,906 on Investment Promotion.

Lapido told that “it They really changed the rules of the game” And that “greatly curbed the interest of entrepreneurs in investing in this type of technology

A reduction was made in which the commitment that the company could assume before the Commission for the Application of the Investment Law (Comap) to invest in 100% renewable energy was lowered to 20%. and also required, among other conditions, the commitment to take on new staff in the company”, he explained.

Fernández, for his part, maintained that what governments have done so far for solar energy “did not reach” and now they are “as if asleep”. “I believe that direct VAT exemption on a solar pump is necessary for agriculture. On the other hand, the Investment Law returned to levels prior to 2011”, he pointed out.

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