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.
However, a recent analysis by Bloomberg noted relevant project delays due to financial problems, like rising inflation and equipment costs that may be a hurdle for developers. This led to Portugal losing its crown as one of the top 10 solar markets in Europe. Despite that, Portugal presents opportunities for growth in the self-consumption and floating solar segments.
The hurdles of licensing and permitting
Aiming for a 9 GW of PV capacity installed by 2030, Portugal government established two market mechanisms: auctions and direct agreements. However, permitting problems may be blocking this goal achievement. The main barrier is the grid access and availability with around 3.5 GW of capacity, spread across 14 projects, being caught up in the permitting process, according to João Garrido, founder of Caparica Solaris, a consultancy specializing in utility-scale solar.
Following EU’s REPowerEU package, presented as a solution to accelerate the energy transition and make Europe independent from Russian fossil fuels by 2030, Portugal “governmental officers have announced many measures to improve the permitting process, namely at environmental level,” Garrido says.
Also under discussion is a new legal framework to simplify the administrative processes, including giving more decision power to DGEG and giving developers the possibility of contributing to grid connection work. However, a lot more could be done as getting an environmental license can take more than a year.
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 believes Portugal has the potential to be a gigawatt market with more than 2 GW installed every year, however the country is still far from the 2030 goal of 9 GW.
The growing self-consumption market
The fastest-growing segment of the solar market in Portugal is regarding small-scale plants for self-consumption. This has more than tripled in size over the last half decade. The main driver for self-consumption, particularly among heavy energy users, is financial, since it gives project owners access to electricity free from grid taxes and fees.
Recent changes on the law are opening doors for new installations close to industrial facilities. However, the commercial and industrial self-consumption segment face similar problems in accessing grid connections.
The development of green hydrogen can be a solution to support the growth of solar self-consumption in Portugal. This up-and-coming low-carbon energy carrier requires low-cost renewable electricity to power electrolysis and is expected to spur solar development across the Iberian Peninsula.
Universal Kraft is working on different solar market projects in Portugal, including a solar to hydrogen development in Chamusca and a project for solar to hydrogen production to be injected into the natural gas pipeline, in Torres Vedras. Both projects are being developed alongside Universal H2.
Portugal has significant potential for new developments and although the solar market faces challenges to growth these are well understood and are being acted upon by the government. It is hoped that new regulations will help address grid connection and permitting issues, allowing developers to exploit the market to its full extent. Meanwhile, Portugal already has plenty of growth potential in segments such as floating solar and projects for self-consumption.
This overview was provided by Solarplaza International BV.
Universal Kraft was at the 4th edition of the Solarplaza Summit Portugal, alongside Universal H2. It was a great opportunity to meet relevant market players and assess new solar opportunities. Follow us on Linkedin to stay updated on our agenda.
