General Framework

In 2001, the government launched a new energy policy instrument - the E4 Programme (Energy Efficiency and Endogenous Energies), consisting of a set of multiple, diversified measures aimed at promoting a consistent and integrated approach to energy supply and demand. By promoting energy efficiency and the use of endogenous energy sources, the programme seeks to upgrade the competitiveness of the Portuguese economy and to modernise the country’s social fabric, while simultaneously preserving the standards of living of future generations by reducing gas emissions, especially the CO2 responsible for climatic change.

Aiming at simultaneously assuring the security of supply, reducing the energy bill and preserving the environment, the E4 strategy relies upon three main lines of action:

• Diversifying the access to energy sources available in the market and increasing the security of services provided by energy suppliers;
• Promoting the improvement of energy efficiency, thereby contributing to reduce GDP energy intensity and the external energy bill, on the one hand, and responding to climate change, on the other hand, laying special emphasis on the opportunities and means of optimising demand-side efficiency;
• Promoting the use of endogenous energy sources, namely hydro, wind, biomass, solar (both thermal and photovoltaics) and waves, establishing a highly dynamic compromise between technical and economic viability and environmental constraints.

While in the past 5 years, the main priorities were focused on the introduction of natural gas (aiming at progressively substituting oil and coal in the energy balance) and liberalization of the energy market (by opening this former state-owned sector to competition and private investment), the emphasis for the next ten years will be put on energy efficiency (supply and demand sides) and exploitation of endogenous (renewable) energy.
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National Programme For the first time, goals concerning the exploitation of renewable energy sources (RES) for power (and thermal) generation have been established by the E4 Programme. These goals take into account the EC energy framework, namely the RES Electricity Directive (2001/77/CE), according to which the indicative figure for Portugal’s target for renewable electricity, expressed as a percentage of the gross electricity consumption by 2010, is 39% (including large hydro).

The goals established by the E4 Programme for 2010 are:

• 4 400 MW additional installed power from renewables (doubling the current capacity), of which are wind - 3 000 MW; small and large hydro - 1 000 MW; others - 400 MW (biomass & waste – 300 MW; wave – 50 MW; PV – 50 MW).
• 500 MW additional CHP (currently 1 200 MW).
• Solar thermal: ~ 1 million m2 (currently 200 000 m2), based on a sustainable annual market of 150 000 m2 (currently ~ 5 000 m2).

A set of initiatives (legislation, incentive schemes) had been introduced by the end of 2001, aiming at stimulating the market (private investors), not only for RES electricity, but also in the field of CHP and solar thermal applications, namely:

• Decree-Law defining the conditions regulating the awarding and management of grid interconnection points for Independent Power Producers.
• Decree-Law altering the price of renewable electricity sold by independent power producers to the public grid.
• Decree-Law revising the technical and tariff conditions regulating the combined heat and power (CHP) generation.
• Launching a national programme for supporting wide diffusion of solar water heating.
• Adapting or broadening the scope of financial incentives for energy efficiency and use of endogenous energies in the framework of the POE Programme (Operational Programme for Economical Development).

Research, Development and Demonstration

Implementation

Financial incentives for renewables and energy efficiency applications are available under the POE programme (2000-2006) – III EC Framework Programme. Grants are provided on the basis of energy and environmental value of the projects, typically ranging from 20% to 40% of the total eligible costs. The total indicative budget for renewables and co-generation projects is 350 mio EUR for the whole period (2000-2006).
Other indirect market development incentives for renewables consist in reduction of VAT rate from 17% to 5% on renewable equipment, custom duties exemption and income tax reductions.

Non government institutions and private companies have also been involved in PV implementation:

• the national Agency for Energy (ADENE) is developing a considerable effort in promoting PV installations, especially in isolated, non grid-connected rural communities.
• The largest Portuguese electrical utility (EDP) participated in a number of PV projects, as part of its R&D activities on New Energy Technologies, including participation in international networks (e.g., EURELECTRIC, EURE) or co-operation programmes (e.g., IEA PVPS) and in demonstration projects supported by the EU or ENERGIA, either in stand-alone and on-grid distributed systems.
• The BP “Sunflower Project”, started in 1998 and consisting in the integration of PV modules on BP gas station canopies. So far, about 250 kWp have been installed.

Industry Status

Market Development

Table 1. Installed PV power in Portugal (1990-2001)

Year	Stand-alone [kWp]	Grid-connected [kWp]	Total annual power [kWp]	Cumulative [kWp]
1990	55		55	79
1991	43		43	122
1992	47		47	169
1993	40	10	50	219
1994	40		40	259
1995	75	2	77	336
1996	88		88	424
1997	98	5	103	527
1998	100	21	121	648
1999	100	146	246	894
2000	142	33	175	1 069
2001	128	51	179	1 248
Total by end 2001	980	268	1 248
Percentage	79%	21%

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Future Outlook

The opportunity exists for such a (strong) market development – favourable legal framework, tariffs and incentive schemes. However, that goal will only be reached provided a few critical barriers are overcome: PV price, equipment and installer certification, low voltage grid interconnection legislation and building codes for PV integration.
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Further reading about Portugal

• Portugal - Country information