A Renewable Revolution

The entire planet has made the transition to renewable energies a priority in the last two years. And, above all, the EU stands out as one of the places most interested in making progress in this area in an attempt to reduce its energy dependence on imports of fossil fuels from abroad. Precisely within this block of countries, Portugal stands out as one of the most advanced after achieving that 34.1% of the energy consumed comes from renewable sources in 2020.

With this percentage, the country is only surpassed by Sweden (60.1%), Finland (43.8%), Latvia (42.1%), and Austria (36.5%). In addition, the country has even had months in which 100% of the energy consumed is renewable. This was the case in March 2018, when electricity generation from renewable sources was 4,812GWh more than the 4,647GWh consumed during the entire month, according to data from the country’s renewable energy association, APREN. Another case was in February 2014, when renewable sources accounted for 99.1% of the national energy consumption.

With these figures, the country is not far from reaching its target of 47% of gross final energy consumption from renewables by 2030. To achieve this share, which will be critical for the country to support its electrification efforts, the government is primarily pursuing onshore and offshore solar and wind projects, as well as supporting distributed generation developments. According to the national energy and climate plan PNEC 2030, solar and wind should continue to grow, while the country is starting to support pilot projects for biomass and renewable gases such as hydrogen. This is a package of measures to help Portugal decarbonize and transition to a green economy.

To deepen this process of change is what the EU is seeking with the Next Generation funds, of which Portugal was scheduled to start receiving part of its allocation of EUR16.6 billion as of June 2022. Of that amount, EUR13.9 billion are grants and non-repayable aid, while EUR2.7 billion are loans. Approximately EUR3.59 billion of the total EUR 16.6 billion allocation will go to renewable energies, as one of the main objectives of Next Generation is to support projects related to the climate transition, such as sustainable mobility, decarbonization, or achieving greater energy efficiency.

The development of offshore projects is essential for the country to achieve the goals described above. Portugal already has two floating photovoltaic parks on rivers, one in the Alqueva reservoir and the other in the Alto Rabagão reservoir. The Alqueva has 12,000 photovoltaic panels with the capacity to produce 7.5GWh of electricity per year, enough to supply 15,000 families. Meanwhile, the Alto Rabagão began as a pilot project in 2017 and was scheduled to be inaugurated in its commercial phase in 2022.

Alto Rabagão is a project of the Portuguese utility company EDP. This company is a multinational with a significant portfolio of renewable projects. In fact, it has a joint venture with Engie called Ocean Winds, a company that plans to invest about EUR1.5 billion in wind energy globally. EDP began to advance in the development of this type of energy with the Windfloat Atlantic project, a semi-submersible floating wind farm located 20km off the Portuguese coast. In its first year of operation, it generated 75GWh.

The contribution of offshore wind in Portugal is still modest. In fact, the country plans to hold its first offshore wind auction in 2023 in an attempt to achieve an output of up to 6GWh. These levels are still small compared to the 13-GW offshore wind auction to be launched by Spain, but lag far behind the 150GW that will be launched by Belgium, Denmark, Germany and the Netherlands combined. In any case, offshore wind is one of the main legs of the future development of renewable energy in Portugal.

Currently, wind power accounts for approximately 26% of total renewable energy generation. Solar accounts for 4%, while biomass accounts for around 3%. The rest of renewable energies provide the remaining 1% to reach 34% of renewable generation capacity. On the other hand, hydroelectric dams contribute approximately 32% of the country’s electricity mix.

Portugal has already achieved a great development in terms of renewable energy; however, it is still a country that enjoys great opportunities for investment. In fact, it is the 23rd country in the ranking of the 40 most attractive global markets for renewable energy investments, according to the Renewable Energy Country Attractiveness Index (RECAI) report published by EY in May 2022. Of the technologies to be developed, the ones with the greatest potential in Portugal are solar photovoltaic, onshore wind and biomass, according to the RECAI report.