Solar market parity in Portugal

Portugal is on the brink of holding its first solar auctions. There was a webinar on Solar Market Parity in Portugal: Status, Challenges & Opportunities held recently.

Marco Alves

Marco Alves, co-founder and GM, MTX Solar said that among renewable energy sources (RES) in Portugal, solar installed capacity reached more than 800 MW in 2018. Portugal is one of the countries in Europe with higher availability of solar radiation. It has between 2,200 and 3,000 average number of sun hours.

For example, in Germany, it varies between 1,200 and 1,700 hours. Portugal also ranks high for political stability, regulatory quality and rule of law among the top 30 countries.

However, the electricity prices are one of the most expensive in all Europe.In 2018, Portugal has come out as the second costliest country in the EU. Electricity prices are only beaten for those charged in Germany.

PNEC 2030 is the Portugal national plan for energy and climate in 2030. Forecasts include 47 percent RES rise in energy consumption, 20 percent RES in transportation sector, -45 percent to 55 percent decrease in greenhouse gas emissions (GEE), +15 GW in new RES capacity, among others. By 2030, Portugal electricity sector should reach 28.6-31.7 GW, with solar reaching 8.1-9.9 GW. Solar would grow 22-27 percent by 2030.

Portugal and Spain defined the increase of total installed capacity in interconnection from 8 percent to 15 percent until 2030. The predicted interconnection between Portugal and Morocco is also meant to increase the reliability and the export capacity of the electrical grid.

As of 2018 July, Portugal had 800 MW of solar installed capacity. The utility scale is still close to 600 MW. 31 percent of all power generation is likely to be from renewable sources by 2027. There should be 7 GW of solar energy.

Let’s get a general overview about solar projects in Portugal, licenced, submitted, on a waiting list and under-development. As of now, 1,240 MW projects are already licensed. About +5 GW projects are under development. The actual available grid capacity is +3 GW. The expected new grid capacity is +1.7 GW.

João Garrido

PPA trends in Portugal
Talking about power purchase agreement (PPA) trends in Portugal, João Garrido, founder, Caparica Solaris, said Portugal is new-born market and has few players. The energy trading market (future contracts) has low liquidity and maturity. Portugal is also waiting for ‘push’ effect of the Green Energy certificates.

Solar PPA market utility scale has been established between IPP and energy traders/retailers. There are new market entrants and players are trying to increase the share. The game is just beginning.

As an example, Alcoutim solar plant has 218,8 MWp, with WELink being the independent power producer (IPP). The offtaker is Audax. It has 20 years PPA. Evora Solar Plant has 28,8 MWp, with Dynavolt/Mirova/Hiperyon being the IPP. Axpo Iberia is the offtaker. It has 10 years PPA.

As for the commercial and industrial (C&I) loans, an excellent market driver is the high power prices (>100 EUR/MWh). There are very interesting project returns. There are also many legal barriers. It is better to be behind the meter focused.

The market needs new and innovative ideas. The market forces are still tied up to a ‘monopoly mindset’ and subsidy dependency. Liberalization process has got a long way to follow. There is need of more specific regulation to unleash this market. The Green energy certificates will help developing PPA. There is a great opportunity for developing this huge market.

PS: Today, May 6, happens to be the 25th death anniversary of my mother, late Mrs Bina Chakraborty. Love you very much Mom! Miss you!!