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The opportunities of the solar market in Portugal

solar market

Portugal holds a great potential for solar market, giving the abundant solar exposure and supportive regulations. As of June 2022, solar is the fastest-growing energy source in Portugal, with almost 2.2 GW of capacity installed, according to DGEG.

But according to a recent Bloomberg report, financial issues including growing inflation and equipment costs — which could be a barrier for developers —are to blame for relevant project delays. Portugal’s ranking among the top 10 solar markets in Europe was consequently lost. Portugal, however, offers room for expansion in the self-consumption and floating solar markets.

The difficulties with permits and licenses

solar market

The Portuguese government devised two market mechanisms, auctions and direct agreements, with the goal of installing 9 GW of PV capacity by 2030. Permitting issues, though, might be impeding the accomplishment of this objective. The primary obstacle lies in the grid’s accessibility and availability, since approximately 3.5 GW of capacity, distributed among 14 projects, is enmeshed in the approval procedure, as per João Garrido, the creator of Caparica Solaris, a utility-scale solar consulting firm.

As a means of expediting the energy transition and achieving European independence on Russian fossil fuels by 2030, the EU’s REPowerEU package was introduced. According to Garrido, Portugal’s “governmental officers have announced many measures to improve the permitting process, namely at environmental level.”

A new legislative framework to streamline administrative procedures is also being discussed; it would grant DGEG additional decision-making authority and allow developers to participate in grid connection projects. But since obtaining an environmental license might take up to a year, much more could be done.

solar market

BloombergNEF expects the market to add 2 GW of new capacity in 2022 while the industry body SolarPower Europe forecasts a total of between 3.7 GW and 6.8 GW by 2025. João Garrido thinks Portugal might become a gigawatt market with more than 2 GW installed annually, but the country is still far below the 9 GW target set for 2030.

The expanding market for self-consumption

The Portuguese solar market’s fastest-growing section relates to small-scale self-consumption installations. In the last five years, this has grown by more than three times. Since self-consumption allows project owners to receive electricity free from grid taxes and levies, it is primarily motivated by financial considerations, especially among heavy energy consumers.

New installations near industrial operations are now possible thanks to recent legal reforms. However, the commercial and industrial self-consumption segment face similar problems in accessing grid connections.

Portugal may be able to boost its solar self-consumption growth by developing green hydrogen. This emerging low-carbon energy source is anticipated to promote solar development throughout the Iberian Peninsula. Electrolysis is powered by inexpensive renewable electricity.

Universal Kraft is engaged in many solar market initiatives in Portugal, such as the development of solar to hydrogen in Chamusca and the production of solar to hydrogen in Torres Vedras, which will be fed into the natural gas network. Universal H2 is being developed in tandem with both initiatives.

solar market

Portugal offers a lot of room for future expansion, and the government is aware of the obstacles facing the solar industry and is taking steps to address them. It is envisaged that new rules will aid in resolving grid connection and permission concerns, enabling companies to fully capitalize on the market. In the meantime, Portugal has a lot of room to grow in industries like self-consumption projects and floating solar.

This overview was provided by Solarplaza International BV.

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Together with Universal H2, Universal Kraft attended the fourth Solarplaza Summit Portugal. It was a fantastic chance to network with industry leaders and evaluate fresh solar prospects. Linkedin followers can keep up with our agenda updates.

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