The public-private partnership project is estimated to cost $200m.
UTE president Gonzalo Casaravilla told Bernama the company has agreed with Electrobras to invest in the project and once the project is ready it will be floating 30% of the company’s shares.
Brazil’s National Economic and Social Development bank will provide part of the finance for the project.
The wind farm is scheduled to be commissioned by 2013.
Uruguay, which majorly generates power from hydro projects, has laid plans to develop wind farms to meet nearly 20% of the country’s energy supply by 2020.