The Decree exhorts UTE (national electricity utility) to execute contracts with private companies to acquire biomass energy under certain conditions, without having to issue a public bid.
Some of those conditions are: the biomass plant shall generate no more than 20 MW; UTE shall be the exclusive acquirer; the contract´s term must not be longer than 20 years; the companies shall be exonerated from payments of fees from the use of distribution grid and transmission grid.
Under the biomass feed-in tariff (Decree 367/010) dispatch is an integral part of the tariff design. Higher tariffs are offered for centrally dispatched electricity (utility-controlled) and lower tariffs for self-dispatched electricity (un-controlled).
Given that Uruguay has high penetration of seasonally and yearly variable large hydropower, as well as non-dispatchable PV and Solar, the dispatchability of biomass is seen as a valuable feature.
The feed-in tariff is available for plants up to 20MW, for up to 20 years and is set in USD. The tariff depends on the dispatch regime as follows:
- Centrally dispatched: Reserve capacity receives a capacity payment of USD 48/MW per hour available, plus 59 USD/MWh for electricity actually produced (Total of 107 USD/MWh).
- Self-dispatch: Electricity generated under this regime receives USD 92/MWh.
Despite the lower tariff, all existing plants chose the self-dispatch regime.