Portugal
With a cumulative score of 2.29, Portugal ranks number 17 among developed markets and number 19 in the global ranking.
- Developed markets
- Europe
2.31 / 5
Power score
2.35 / 5
Transport score
2.18 / 5
Buildings score
Low-carbon strategy
Net-zero goal and strategy
The European Commission’s Green Deal, unveiled in December 2019, sets the pace for emissions reduction for member states in order to reach net zero by 2050. Portugal plans to lower its emissions by 43% from 2005 levels by 2030 in sectors covered by the European Union Emissions Trading System (EU ETS), and by 17% for sectors that fall outside the EU ETS.
Portugal’s decarbonization strategy centers around electrification and the expansion of electricity generation from renewables. As part of its National Energy and Climate Plan (NECP), the country is targeting 80% of electricity generation from renewables in 2030, and also aims to reach a 47% share of renewables in final energy consumption, up from 31% in 2020.
Portugal has set technology-specific renewables capacity targets for 2030 in its latest NECP to guide the expansion of renewables. It aims to increase its solar and wind capacity to 19 gigawatts (GW) by 2030, from 7GW in 2019.
Portugal is striving towards increasing interconnection with the rest of Europe and has set ambitious goals for clean hydrogen. It is aiming to build 2.1GW of electrolyzer capacity by 2030.
Nationally Determined Contributions (NDC)
Portugal’s ‘nationally determined contribution’ (NDC) is the same as that of the EU. The EU’s initial NDC committed to lower emissions by at least 40% by 2030 compared to 1990 levels. The updated NDC submitted in December 2020 strengthened that target to a 55% reduction in emissions by 2030.
Fossil fuel phase-out policy
Portugal is one of the few countries in the EU to have introduced a carbon tax in 2016 to accelerate carbon emissions reduction. The country has been coal-free since 2021 after the closure of its last coal plant due to unfavorable economics, ahead of the planned 2023 coal phase-out target.
Power
Power policy
Renewables enjoy a dominant share of generation capacity in Portugal, particularly onshore wind and hydro. Meanwhile, fossil fuels contribute just under half of generation.
Onshore wind was the largest beneficiary of Portugal’s feed-in tariff scheme, with capacity increasing tenfold between 2004 and 2014. However, the scheme's suspension ended growth. The government's support program for underdeveloped technologies has a maximum award of 5 million euros ($5.82 million) per developer – too small for offshore wind projects. However, the government is helping to provide a grid connection for a floating offshore wind platform.
Portugal launched its first utility-scale renewable energy tenders in 2019 to accelerate progress towards its target of installing 7 gigawatts (GW) of new solar PV capacity by 2030. The first round for 1.4GW of PV injection capacity was held in July 2019. The second round opened in August 2020 and allowed solar-plus-storage projects to participate, awarding contracts to 187MW of standalone PV and 483MW of PV plus storage.
Power policies
Power prices and costs
Portugal and Spain share the Iberian wholesale power market, known as Mibel, which is coupled with the European day-ahead market. Electricity is dispatched in merit order, and power prices are generally higher than the European average due to limited interconnection and dependency on imported commodities.
Power prices are primarily driven by gas, and to a lesser extent coal and carbon. The growth of wind, in combination with a large hydro fleet, has reduced the country’s dependence on gas. However, gas generation remains important as it fills the gap during times of low hydro or wind output.
Power market
Electricity generation and retail are fragmented in Portugal. Energias de Portugal (EDP) holds the greatest market share in both segments, but a number of players with a 1% share or less are active.
Installed Capacity (in MW)
Electricity Generation (in GWh)
Utility privatisation
Which segments of the power sector are open to private participation?
Wholesale power market
Does the country have a wholesale power market?
Doing business and barriers
Overcapacity and limited interconnection increase curtailment risk and may pose a barrier to higher market penetration of unsubsidized utility-scale PV. France, Spain and Portugal have signaled steady progress on interconnector developments between the Iberian Peninsula and the EU internal market, but it is unclear whether these projects will mitigate oversupply. According to Bloomberg's country risk assessment, Portugal has very low financial risk, but scores less positively on economic and political risk compared to its European counterparts.
Currency of PPAs
Are PPAs signed in or indexed to U.S. Dollars or Euro?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes?
Transport
EV market
Portugal is aiming for electric vehicles (EVs) to account for more than 30% of vehicle sales in 2030, rising to 100% by 2050. To help reach its 2030 goal, the country’s Environment and Finance Minister announced back in 2019 that 50% of the public administration's fleets will be EVs.
EV policy
Portugal has also taken legislative steps to implement and execute its electric mobility ambitions. The Programme for Electric Mobility is a legal framework that applies to the electric mobility sector and EV users. It covers prices and service quality, and sets out guidelines for tariffs for entities managing the electric mobility network.
To complement the legislation and boost EV uptake, Portugal approved incentives for EV purchases totaling more than 2.6 million euros in 2018 as part of its Environmental Fund. Other types of incentives on offer in the country include tax exemption for EV purchase, and a reduction circulation tax. Companies that have EVs are exempt from autonomous tax and also benefit from a reduction in value added tax.
Transport policies
Fuel economy standards
Does the country have a fuel economy standard in place?
Buildings
Buildings market
Portugal has identified energy efficiency, electrification, insulation, and heat pumps as the main avenues for decarbonizing the buildings sector in its journey towards carbon neutrality by 2050. The central government has established a grant scheme for residential heating systems – called “More Sustainable Buildings” – which subsidizes 70% of the cost of heat pumps and solar thermal systems up to a maximum 2,500 euros, and 70% of biomass systems up to 1,500 euros.
Energy performance standards
Are there minimum energy performance standards for buildings?
Energy efficiency plan
Does the country have a national energy efficiency plan?
Buildings policy
Under the country’s National Buildings Energy Performance Certification System (SCE), all residential, service sector and public buildings must go through an audit to receive an energy certificate when they are constructed or deeply renovated and each time the building changes ownership or is leased. There are also other conditions warranting a fresh audit for service sector or public buildings.
