Portugal

This update sets higher targets for 2030 than the original version: -55% reduction of GHG emissions, ref. 2005; and 51% renewable share in the final energy consumption (actually, 60% would be technically compatible with its various sub-targets). Regarding final electricity consumption, a larger increase is now foreseen, to accommodate new industries, such as data centers and batteries, as well as faster electrification of residences and of industrial processes, and larger stocks of electric vehicles. However, the main demand increase is foreseen for intermediate processes, especially production of renewable hydrogen from electrolysis and of its derivatives, like methane, methanol, jet fuel and ammonia. A total electrolyzer capacity of 3 GW (H₂ output) is envisioned.

These final and intermediate demand increases should be met solely by additional renewable power, with the overall capacity reaching 43.2 GW until 2030. This way the renewable share at the production mix would reach 93% by 2030. Within a context of very high penetration of non-firm renewables, electricity storage will have to play an even larger role than today. The existing reverse hydro capacity is to be increased from 3.6 GW to 3.9 GW, and battery banks from 1 MW to 2 GW.

Although repowered onshore wind, and new offshore wind, are two technologies that will provide a significant part of the renewable capacity increase (4.5 GW and 2 GW respectively), PV power plants – both small and large scale – will be key in the rollout of the NECP, being the technology with the highest yet-to-be-tapped potential. 20.8 GW of installed AC capacity are foreseen for 2030, split between 5.7 GW for decentralized and 15.1 GW for centralized installations.

Considering that the current installed PV capacity is now at 25% of the 2030 goal, see Fig. 1, this will require an acceleration of the PV deployment rate, especially for large power plants.

Indeed, the Portuguese legal panorama has seen during 2024 several new legislative pieces and energy policy measures with repercussion in the implementation of PV projects. The Decree-Law No. 22/2024 (March) extended the validity of exceptional measures for simplifying renewable energy project procedures until the 31^st of December, which helped to ensure conditions and certainty for the projects in the pipeline. Decree-Law No. 99/2024 (December) partially transposed the revised Renewable Energy Directive, introducing simplifications of renewable projects’ licensing, promoting self-consumption and energy communities, revising guarantees and compensations to municipalities, adjusting the electro-intensive customer regime, improving transparency in bilateral energy contracting, and adapting the legislative framework to support the energy transition and green re-industrialization. Also relevant was the constitution of the Mission Structure for the Licensing of the Renewable Energy Projects 2030 (EMER). With the aim to incentivize the incorporation of renewables in the national electricity system through a more transparent, agile, and simplified procedural regime, EMER is expected to implement a one-stop for the permitting process, consolidate the sector’s legal framework, and establish a monitoring system that ensures effective project monitoring and control.

With a 4.5-fold increase of large PV projects needed until 2030, conflicts regarding land use and project permitting are expected to become more frequent. Local communities in the rural areas already manifest disapproval and complain of lack of added value, and environment-related organizations are concerned about the welfare of habitats and species conservation. Promising approaches in this regard lie in floating PV as well as in AgriPV or EcoPV, with a few pilot examples emerging, pushing for the revision of the current regulation that does not permit renewable projects inside National Agricultural Reserve zones.

The subjects addressed seem to concentrate on opposite ends of the PV value chain. On the one hand there are academic groups focusing on materials. The solar cell technologies addressed include amorphous/nanocrystalline silicon, silicon nanowires, Cu2O, Cu(In,Ga)Se₂,  dye-sensitised materials, perovskites, kesterites, quantum dots, as well as organic and hybrid inorganic-organic cells, tandem cells, metal oxide photo-electrodes, and replacement of critical materials

On the other hand, there are R&D groups at universities, at the major Portuguese utilities and at some other private companies, that deal with aspects at the other end of the value chain. For instance, PV integration (buildings, vehicles), storage coupling, automation and control of small systems as well as of large power plants, agrivoltaics, floating PV, and energy communities. There is also an emerging SME ecosystem focusing mostly on tools to enhance performance and reliability of PV installations, with a few contributing to the development of new module technologies and solar mobility solutions.

With a 36% increase of installed capacity in 2024, the contribution of PV raised to a 12.3% share of the electricity consumption mix. However, reaching the very high 2030 targets for PV will require more reforms of permitting procedures, taxes, and fiscal loads, as well as a better electricity market design that can avoid increasing occurrences of zero or negative prices in the wholesale market.

Regarding the market, during 2024 PV continued to experience robust growth, see Fig. 2, benefiting from supportive policies, technological advancements, and lower equipment costs.

Distributed systems (including self-consumption systems and small power plants) added 0.7 GW, a 34% growth over 2023 installed capacity.

Regarding large PV power plants, new 0.8 GW entered in operation, including projects from the 2019 and 2020 solar auctions, signifying in this case a 38% growth over 2023 installed capacity. Nevertheless, this 36% increase (+1.8 GW), represents some deceleration from the corresponding 2023 value, that was 46%.

The national PV capacity (DC) has reached 5.6 GW by the end of the year, (2.7 GW decentralized and 2.9 GW centralized), consolidating its role in the national electricity mix, see Fig. 3. The contribution of PV was 7.1 TWh (includes self-consumption), translating to a 12.3% share of the consumption mix and a 15% share of the production mix.

Although the increased targets of the NECP reflect confidence in attracting private sector investment in renewables, the transition to renewable electricity sources is still requiring significant market design adjustments. As outlined in the Electricity Market Reform, there are weaknesses in the day-ahead and intraday energy markets that have become even more apparent during 2024. The PV power plants without FiT have been dramatically affected by the increasing occurrences of zero or negative prices in the wholesale market, alongside sharp price peaks, particularly during hours of natural gas combined-cycle power plants market clearance. Without a swift regulatory response and considering overall sector growth, new and strategic utility-scale investments will be hindered.

Adding to the uncertainty atmosphere for PV projects, there are the issues related to high taxes and fiscal loads. Apart from the normal Corporate Income Tax (IRC), Value-Added Tax (IVA) and Municipal Property Tax (IMI), additional fiscal burdens exist like Municipal Surtax and Stamp Duty. In addition, there are the fees related to licensing, grid connection, and other regulatory processes. Also very relevant are the Electricity Social Tariff – to which producers still contribute despite the pressure to pass its funding on to State Budget – and the competitive balance mechanism “clawback” that has been reinstated in 2024. Both levies work as advance payment, subjecting the promoters to future adjustments with unpredictable impact in cash flows.

On a more positive side, besides the faster permitting that the new EMER agency may enable, the anticipated revisions of the Transmission and Distribution Network Development and Investment Plans are expected to fast-track many investments. They should contribute with asset modernization and creation of new grid connections, while also starting to introduce flexibility measures and increasing reliability. This will be paramount to ensure greater grid adaptability and resilience to accommodate the growing share of variable PV generation, allowing for its efficient integration into a dynamic and increasingly decentralized energy system.