SPEAKER_03: This week, NPR is doing something new, dedicating an entire week to stories and conversations about the search for solutions to climate change. Today, we are bringing you a story about a giant environmental revolution in a tiny country. This is Planet Money from NPR. Last month, we traveled thousands of miles to Uruguay, this tiny country tucked in between Argentina and Brazil. To hear a pretty wild story from a man named Ramon Mendez Galan. We met him at his house in Montevideo. Hola! Hola, Ramon! Mucho gusto! El mucho ruto! Erika! Erika, yo menida!
SPEAKER_05: Ramon says the story starts back in 2007.
SPEAKER_06: His little country had a massive problem, one that had no obvious fix. The economy of this country of three and a half million people was growing and there wasn't enough energy to power all of that growth.
SPEAKER_05: So it was difficult for us to cope. It was difficult to get electricity. There was energy rationing. For some time, we were beginning to have blackouts.
SPEAKER_03: People's electricity bills? They'd gone way up from just a few years earlier. Ramon, at the time, he worked as a particle physicist.
SPEAKER_05: I worked for many years trying to understand what happened at the big bang, what was the physics of the big bang, and how matter was organized in the universe and this kind of things.
SPEAKER_03: When I hear the big bang theory, I just think of the TV show now? Absolutely. Ramon is the kind of guy who, when he gets interested in something, whether it's the big bang or, you know, his country's energy crisis, has to look at everything from every angle and never stops looking until he figures it out. So he starts thinking about where Uruguay gets its energy from and where it could get
SPEAKER_06: its energy from.
SPEAKER_05: When you are trained as a scientist, you are trained to see an unsolved problem and trying to find an explanation and a solution. So I use, if you wish, my scientific skills I had developed in order to face this difficulty with the same strategy.
SPEAKER_03: He starts trotting ideas down in notebooks while he's at work, at home.
SPEAKER_05: I mean, just informally, not, not, just very informally.
SPEAKER_06: He starts researching different sources of energy. He reaches out to experts he knows in other countries.
SPEAKER_03: And he ends up writing this whole plan about how Uruguay should just switch to renewable energy. There would be less pollution. It would be better for the climate. And in the long run, it might even be the most economical choice Uruguay could make.
SPEAKER_06: And then one day he's in his office and his phone rings. This is what he hears. He said, oh, hi Ramon.
SPEAKER_05: I've been reading what you said and talking with the president. And we wanted you to implement that strategy.
SPEAKER_03: The president as in the president of Uruguay. He'd seen Ramon's plan and he now wanted Ramon to become Uruguay's new national director of energy.
SPEAKER_05: We want you on the team. I mean, we need to do different things because in the way we are right now, I mean, we are not getting a solution. We have a more and more deep crisis.
SPEAKER_06: This whole conversation, it was under three minutes. So it was a total surprise.
SPEAKER_05: What did you say? I said, thank you. I don't know.
SPEAKER_06: He's like, I've already got a pretty good job. Do I really want to give that up? And how badly do I want to be the person who tries to completely remake my country's entire energy system? He thinks about it for 15 days.
SPEAKER_05: But at the end of the day, I say yes. Yeah. He said yes. Yeah. And I said it was absolutely impossible to pre-determine what would happen at the end of this experience. But I want to do it. So I said yes.
SPEAKER_03: Hello and welcome to Planet Money. I'm Erika Barris. And I'm Amanda Aronchick.
SPEAKER_06: Countries all over the world have spent the last decade announcing lofty goals to reduce the emissions that cause climate change. Like we want to power our country using 50 percent renewable energy by 2035. But Uruguay? They actually did it. In a typical year, 98 percent of Uruguay's grid is powered by green energy.
SPEAKER_03: Today on the show, the story of how that happened. How Uruguay went all in on Ramon's plan to keep the lights on and managed to do it without wrecking the planet at the same time.
SPEAKER_00: Support for NPR's Climate Week, a search for solutions and the following message come from Organic Valley, a farmer-owned cooperative dedicated to bringing ethically sourced food to the people. Those who choose Organic Valley support more than 1,600 small organic family farms across the country that are doing big things for the environment, like keeping more than half a billion pounds of toxic pesticides off the land since 1988. Discover climate-friendly dairy at ov.coop slash ethically sourced.
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SPEAKER_03: Ramon lives in this nice neighborhood in Montevideo. Lots of houses set back from the road behind gates. We're standing outside his house on the sidewalk. All right, so we are off.
SPEAKER_06: Where are we going, Erica? We are going to, where are we going?
SPEAKER_05: I think we're going to Caracoles. Sierra Caracoles.
SPEAKER_03: Sierra de los Caracoles. We are going to take a little road trip with Ramon.
SPEAKER_06: He's going to show us what Uruguay's energy landscape looked like when he was offered his new job back in 2007. But first, so you're going to sit in the front, Amanda.
SPEAKER_06: Yep. We all have to squeeze into this teeny tiny little car.
SPEAKER_03: What was your official title in government?
SPEAKER_05: What was at that time, it was director national de nargia.
SPEAKER_06: Has the director national de nargia ever been in the back of a Suzuki Solario for two hours?
SPEAKER_05: You don't know me. I'm a simple guy.
SPEAKER_03: Very good. Okay. Ramon is going to walk us or drive us through the options that were available to him back then. The different sources of energy that he could have used to power the electric grid.
SPEAKER_06: Option one, natural gas. A few years before Ramon started his new job, Uruguay and Argentina had built this fancy new pipeline. At first, the road we're taking out of the city of Montevideo actually runs sort of parallel to it. But the pipeline turned out to be a little bit of a bust and Argentina didn't end up exporting a whole lot of natural gas to Uruguay.
SPEAKER_05: So we were having strong infrastructure with no capability of using it.
SPEAKER_03: And Ramon says Uruguay could have imported liquefied natural gas from other countries, that would have required building a whole new plant to convert that liquid natural gas.
SPEAKER_05: So this is very costly infrastructure. It's about more than a billion dollars.
SPEAKER_03: More than a billion dollars? They didn't have a billion dollars. The next option?
SPEAKER_06: Coal. Coal's cheap, right? Is there coal here? Coal, no, no coal at all.
SPEAKER_05: No coal at all? We don't have coal. We don't have natural gas. We don't have oil. All of this needs to be imported. So the decision concerning coal was not to import coal in order to power our plants.
SPEAKER_06: And they didn't have coal-fired power plants. So they'd have to build them and then they'd have to expand the port to import coal.
SPEAKER_03: Ramon, he thought about nuclear too. And Ramon wasn't totally out on nuclear. But again, there was the cost. And most likely the country would still have to import something. In this case, uranium. OK, fine.
SPEAKER_06: Now, Uruguay did have hydropower. About a quarter of the energy the country used actually came from hydroelectric dams.
SPEAKER_05: But we had already used our large rivers. I mean, all the possibilities to use water from our rivers has already been used.
SPEAKER_06: And when there were droughts in Uruguay, the rivers dried up. Of course Ramon considered solar. As we're driving, the sun is full on. I mean, the sun is shining.
SPEAKER_03: It's a beautiful day. We're here. But in 2007, solar was way more expensive than it is now.
SPEAKER_06: And that is when he came to a solution. A solution represented by the final stop on our little road trip.
SPEAKER_05: Yeah, this is the entrance. Oh, this is the entrance.
SPEAKER_03: Oh, this is a dirt road. Yeah. When we get out of the car, the answer to Ramon's problem is whipping and whirling
SPEAKER_06: and whooshing around us. It's windy. You will see it's windy. Is it windy? Yes.
SPEAKER_03: Oh, it is windy.
SPEAKER_06: We're at the top of one of Uruguay's highest hills. It's one of the windiest places in the country and you can see all the way out to the Atlantic Ocean.
SPEAKER_03: And it's not just that Uruguay is windy. It's that there is so much wide open land in the country. The overwhelming majority of the country is agricultural land, barely inhabited. People here love to share this stat that there are four cows per person here. That means there's a lot of poop. These are everywhere. Literally everywhere. Remember, four cows per inhabitant.
SPEAKER_05: Yes, I know.
SPEAKER_06: So four cow poos per inhabitant.
SPEAKER_06: Yeah, I did the math. So Ramon thought about all of this windy, uninhabited land and his vision for solving Uruguay's energy conundrum was to cover this land with rows and rows and rows of turbines. He imagined them on the hills, on the cow pastures, east, west, north, everywhere. And turbines for everybody.
SPEAKER_05: You will see that almost every place in the country is a windy place.
SPEAKER_03: They would have to bring the turbines themselves into the country, but once they were put up, that would be it. From that moment on, everything would come from Uruguay's own resources, from the wind. There'd be nothing left to import. This was the vision Ramon had brought us all this way to see.
SPEAKER_06: It took us an hour or so to head back to the city. Want me to take this?
SPEAKER_03: No, no, no, I'm just holding it out here. Thank you very much. I think we are good to get going on the road.
SPEAKER_03: So great. 2007 Ramon had settled on what he thought was the best kind of energy for Uruguay. But back at his house the next day, he tells us that making his vision a reality, that would be way more difficult.
SPEAKER_06: Just remember Ramon, he was a particle physicist building a nationwide network of wind turbines. That was all new territory for him and for all the people working with him in that new government job.
SPEAKER_05: We didn't have the capacity to do that. We didn't have the experience. We didn't know how to do it.
SPEAKER_03: But Ramon knew there were all these companies around the world who did know how to do it. All he had to do was figure out a way to get them to share that expertise with Uruguay.
SPEAKER_06: Ramon starts thinking about how they dealt with electricity across the border in Brazil. Some electric companies there were partly run by the government and partly run by private companies. Ramon's like, maybe something like that could work in Uruguay, but with wind companies? Which would be great, but it wouldn't solve the much larger problem.
SPEAKER_03: Money.
SPEAKER_05: The size of our economy was about $50 billion. I would need more than six.
SPEAKER_03: Six billion dollars. Ramon's budget to run his entire office was just $10 million.
SPEAKER_06: And Uruguay's finance minister was very clear with Ramon. We are not going to fund this project. We can't just add $6 billion to our national debt. We would never be able to get decent terms on a loan ever again.
SPEAKER_03: And this is the moment when Ramon came up with his big innovation. What if they took the public-private partnership model Brazil used and put a Uruguayan twist on it?
SPEAKER_06: This is how he thought it could work. Uruguay would invite companies from around the world, companies with expertise in wind energy, to cover his country with turbines. They do their business.
SPEAKER_05: They know how to do it.
SPEAKER_03: Whatever energy they produced, the Uruguay Public Utility would agree to buy from them.
SPEAKER_05: They sell everything that they are producing to the public utility.
SPEAKER_06: The vast majority of the billions of dollars it would cost to put up all of these turbines, that would be paid by the companies, not by the Uruguayan government.
SPEAKER_03: And to get the companies to want to take on that huge upfront cost, the government would agree to buy all of the energy a company produced at a fixed rate. So even if the market for energy fell apart, the companies would be guaranteed that the price they got would stay the same for the full length of their contract.
SPEAKER_05: I mean, investors need to have the security that their investment will be paid back. And for that, they need a certain amount of time.
SPEAKER_06: Ramon and his team settled on contracts that would last for 20 years.
SPEAKER_03: Over the next several months, Ramon set out to convince lawmakers that his plan would work. And he got so much buy-in that they even ended up changing laws for him. Like one about who owned the wind.
SPEAKER_05: I mean, the wind, it does not belong to the landowner. The wind is a public good.
SPEAKER_06: Yes, according to a new law, all the wind in the country now officially belonged to the Uruguayan people.
SPEAKER_03: Which was helpful, because a lot of the wind Ramon wanted to use to power the grid was blowing over privately owned land. Now the wind companies would have a legal right to capture the wind.
SPEAKER_05: So if you have a property with enough wind, you cannot say I don't want a wind farm to be installing my land.
SPEAKER_06: If your property was selected to get turbine, yeah, you'd get some money. But the wind turbine would go up whether you wanted it there or not.
SPEAKER_03: In 2009, Uruguay started holding auctions where different wind companies from around the world came to bid on how cheaply they'd sell renewable energy to the country. In 2011, they had an auction where they wanted 150 megawatts of new wind power, which would
SPEAKER_06: have represented about 5% of the country's energy generation. More than 20 different companies threw in their bids.
SPEAKER_05: And after many ups and downs, we made almost last bidding process. And there we got eight times what we needed.
SPEAKER_03: And even better, the bids were coming in lower than they had before. The original plan had been to keep doing these auctions for four more years. But Ramon and his team decided, let's do it all right now. Let's take all the bids.
SPEAKER_05: So we are going to give contracts to those that have won. But then to those that we apparently we didn't need them, we tell them, if you accept the prize of the winner, you will also receive a long term contract. And almost all of them, more than 80% accepted the prize of the winner. And so they also got a contract.
SPEAKER_06: This auction that was supposed to add about 5% to Uruguay's capacity to generate electricity ended up adding more than 40%. Ramon was like, these prices, they're pretty good. We may not see them again.
SPEAKER_05: We realized that that was the moment that, I mean, everything that we had been working for for three years ended up with exactly what we wanted. So it was the occasion. We jumped on it.
SPEAKER_03: After the break, how did Ramon's plan work out? And is it the sort of plan that other countries should be trying to emulate?
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SPEAKER_03: Within a few years of Ramon getting that life-changing phone call inviting him to become the National Director of Energy, he'd done the thing he had set out to do. Uruguay generated its own renewable energy and, adjusted for inflation, consumer prices had gone down. Today there are more than 700 wind turbines whooshing away. In fact, the country is now making so much energy, it's actually exporting to its neighbors.
SPEAKER_06: And the rate it's paying for energy has fallen by over 40%.
SPEAKER_03: Best of all, at least from a climate perspective, in a typical year, 98% of the energy used to run Uruguay's power grid comes from renewable sources. Hydropower, biomass, solar, and a whole bunch of wind. Today, Uruguay's energy grid contributes almost nothing to greenhouse gas emissions. It was an absolute and complete transformation.
SPEAKER_05: A complete transformation. Many people say that they talk about what happened as the Uruguayan Revolution, energy revolution, because it really was as a revolution.
SPEAKER_03: And Ramon got all this attention. He's been invited to speak in all these different countries. One year he was in Fortune magazine's World's 50 Greatest Leader list, alongside Tim Cook, Ruth Bader Ginsburg, and the Pope.
SPEAKER_05: Yes, in some cases, I feel like a rock star because yes, it's incredible because people want to talk with me, take a picture with me, and you know, it's incredible.
SPEAKER_03: Now in a lot of cases, public-private partnerships get mixed reviews. In other countries, there have been problems with quality, with accountability, with corruption.
SPEAKER_06: But Ramon's model for getting private companies to set up renewable energy infrastructure for long-term contracts is still going strong. It's been used all over the world. The Dominican Republic, South Africa, Thailand. It's become kind of a new Uruguayan export.
SPEAKER_03: Still, what Ramon did? It does have some critics.
SPEAKER_06: Relying so much on wind energy means there is not always enough energy when people want it. Sometimes the wind just doesn't blow enough. And it's hard and expensive to store energy for when you need it.
SPEAKER_03: So, like in other parts of the world, if you live in Uruguay and you want to get the best rates on your energy, you have to sign up for this metering program where for the busiest hours every day, any energy you use in your home will cost more. People plan their whole days around this. Like they don't cook dinner between, say, 5 and 9 p.m. So they can save money. And the price saving for consumers, it wasn't amazing.
SPEAKER_06: Just about everyone we talked to in Uruguay says, yeah, their energy bills came down a little bit, but they're still higher than what people pay across the border in Argentina and Brazil.
SPEAKER_03: Some people, they tie this directly back to Ramon's decision to accept all of the bids, all at the same price, all at once. To sign up to buy way, way, way more energy than they had originally planned to. But since Ramon pulled that wildcard move, the price for wind energy has kept going down. It's like 30 to 40 percent cheaper per megawatt now than it was then. But that lower price does not matter because the utility companies signed contracts that locked in those higher rates for 20 years.
SPEAKER_06: Ramon has heard this critique a lot. But at the same time, the country was paying nearly $600 million a year for energy. And he says it still didn't have enough.
SPEAKER_05: Either we did what we did or we waited for 10 extra years to have electricity at the present cost. And if you compare the two options, the one that we did was the best one.
SPEAKER_03: Like what people are paying for energy at home, he says that actually has nothing to do with what he did. Because of Ramon's plan, the government is now paying around 40 percent less per year for energy than when he started. But he says most of those savings aren't passed on to customers.
SPEAKER_05: This was perhaps the worst day when it was in office, when I realized that all these tremendous efficiencies that we were getting in the electricity production would not go entirely to the electricity sector.
SPEAKER_06: Instead, the government decided to use that savings to fund all of their other priorities. I mean, it's OK.
SPEAKER_05: I mean, because with this money, with this tremendous cost reduction, we are financing now education and health care. So it's fine. But it's not what I was expecting.
SPEAKER_03: But there's no denying the impact of what Ramon did. When you're driving through the Uruguayan countryside, you see rows and rows of turbines stretching out into the sky, harnessing the power of the wind. What you don't see? Tankers of gas, trainloads of coal, power plants spewing black smoke into the air.
SPEAKER_06: In terms of limiting climate pollution and keeping the Earth's temperature from rising even more, what Uruguay has achieved doesn't amount to all that much. It's a small country. Only three and a half million people live there. It was never a giant polluter.
SPEAKER_03: But Ramon says that Uruguay is important as a model to show that with a bold enough plan, any country can remake its relationship to the planet.
SPEAKER_05: There's no chance of continuing doing the same in this 21st century. So when there is a success case, these success stories show that the new, call it green economy, call it whatever you want to call it, but this new economy is possible. It's not just a dream.
SPEAKER_03: It's not just a dream, Uruguay. It's the proof. Today's show was produced by Willa Rubin with help from Emma Peasley. It was engineered by Maggie Luthar, fact-checked by Sierra Juarez and edited by Keith Romer. Alex Goldmark is our executive producer. For more on climate change solutions, check out the other stories that are part of NPR's
SPEAKER_06: Climate Week at npr.org slash climateweek.
SPEAKER_03: Thank you to Kiel Mokarat, Marcelo Caffera, Natalia D'Agosti, Ignacio Estrada, Walter Verri, Oscar Ferenho, Nicolas Saldías and Kerry Kahn. I'm Erica Barris. And I'm Amanda Arunchik.
SPEAKER_06: This is NPR. Thanks for listening.
SPEAKER_03: I have actually never been very close to a windmill at all. So do they make a lot of noise? Yes. Yes.
SPEAKER_05: What does it sound like? Oh, it's like a wind. It's like the effect of the blades interacting with wind. And so it's kind of, you will see it.
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