Evaluating the energy transition options for the Americas on the case of Uruguay and Mexico : multi-model approach and hierarchical modeling

Abstract

Meeting the global goal of keeping temperature rise below 1.5°C can be achieved by transitioning to renewable energy sources that are sustainable and widely accessible. Transition pathway research is essential to identify the best strategies for a reliable and cost-effective shift. This study examines how Uruguay can reach a fully renewable and fossil-free energy system by 2050, using three advanced energy modelling tools: LUT Energy System Transition Model (LUT-ESTM), EnergyPLAN, and EP-ALISON-LUT. These models assess technical, economic, and sector-specific transitions within power, heating, transport, and industry, simulating hourly operations while taking into account renewable energy availability, inter-sector integration, energy storage solutions, and flexibility options. The results confirm that Uruguay can realistically eliminate fossil fuels across all sectors by mid-century, achieving total defossilisation primarily driven by renewable electricity. According to the scenarios studied, between 70% to 80% of electricity would be generated be solar photovoltaics, supported by wind power and hydropower, each contributing about 12-18%. Battery storage emerges as a pivotal technology to balance the energy system, while sustainable biomass plays a key role in heating applications. The models also highlight an increasing importance for e-fuels, particularly in sectors that are challenging to decarbonise. Incorporating battery and e-fuel storage significantly reduces curtailment, enabling LUT-ESTM to achieve the lowest overall yearly system cost, estimated at 2.7 b€ in 2050. On the contrary, EnergyPLAN and EP-ALISON-LUT models show slightly higher annual costs at 3.3 b€ and 3.2 b€, respectively. These findings conform to Uruguay’s existing policy framework and underscore how Uruguay’s approach can serve as an example for other countries.

To achieve the 1.5°C goal of the Paris Climate agreement, a transition to renewable energy is required. A four-stage hierarchical approach is used in this study in the LUT Energy System Transition Model, which performs an hourly, multi-sector analysis on 23 regions of Mexico. This research models the Mexican energy system with three different policy scenarios, a Best-Policy Scenario, requiring 100% renewable energy and net-zero carbon emissions; a Delayed-Policy Scenario, that starts RE transition with a 10-year delay; and a Current-Policy Scenario based on ongoing policies. Energy sectors, including power, heat, transport, industry, and desalination are analysed for this study. The results show that the Best-Policy Scenario is the most economical and best aligned with Mexico’s climate goals. By 2050, the optimal scenario involves installing electricity generation capacity of 1370 GW and electrical storage capacity of 2 TWh which results in 37.2 €/MWh of levelized cost of final energy and annual system costs of 82 b€. Solar photovoltaics have the highest share in electricity generation, providing 94% (2414 TWh) of electricity at a levelized cost of 24 €/MWh supported by wind power, hydropower, battery storage, and green hydrogen, enhancing system flexibility. Delaying action would lock in reliance on fossil fuel infrastructure, increase cumulative CO2 emissions by 3.7 GtCO2, and lead to 1 b€ higher annualised system costs. Continuing current policies would result in 690 MtCO2 cumulative emissions and annual costs of 120 b€ by 2050, 46% higher than that of the Best Policy Scenario. The results underscore the advantages of timely transition towards renewable energy offering lower long-term costs, improved energy independence, and elimination of greenhouse gas emissions from energy sectors.