Portugal ranks as the 11th EU member state most dependent on imported energy sources, with a decreasing dependence since 2000, when 85% of its energy was imported. This is mainly due to the lack of fossil energy sources, which continues to impact the total consumption of primary energy significantly. The main fossil fuels that account for the primary energy supply are oil, natural gas, and coal. It is estimated that Portugal’s fossil fuel dependence by 2030 will be around 65%. Nevertheless, over the last two decades, Portugal focused heavily on developing renewable energy, primarily wind and solar, which helped the country lower its energy dependence to below 80%. Portugal currently has 8.8 GW of hydroelectric capacity, 13.3 GW of onshore wind and 3.1 GW of solar, which together represent 87% of its total installed capacity.
Portugal ranks 7th in countries with the highest share of renewable sources used to produce energy in Europe. As of May 2023, renewable energy incorporation in mainland Portugal was 60.3%, 30.3% in Madeira, and 35.1% in the Azorean islands.
Portugal continues to be a global leader in renewable energy production. A well-structured incentive mechanism and the adoption of ambitious targets helped this sector grow over the last couple of years. Portugal’s new ambitious national energy and climate plan for 2030 and roadmap to carbon neutrality by 2050 targets at least 80% of electricity production coming from renewables and to further decarbonize the energy sector. The Portuguese Minister of Environment and Climate Action Duarte Cordeiro claimed that developing hydrogen and offshore wind power will allow the country to reduce its energy dependence. He also stated that the Government is speeding up the process to license solar power production and the renewal of the wind turbines with greatest productivity, supporting energy generation via hydrogen and counting on offshore wind power generation to reach 80% of renewables by 2026.
The government is committed to a policy that will support the development of the market and ensure decarbonization goals are met most cost-effectively. There is a strong focus on electricity and natural gas interconnection to unlock the potential of Portugal’s solar and wind resources and liquefied natural gas capacity to support local economic development and European energy security. Portugal is a leader particularly in wind generation and is driving the rapid deployment of photovoltaic solar energy and battery storage. In efforts to increase renewable energy, Portugal expects to launch its first offshore wind power auction by the last quarter of 2023. This project has goals of reaching 10 gigawatts capacity by 2030.
To achieve these ambitious goals, Portugal announced the decommissioning of the country’s two coal-fired thermoelectric power plants. The EDP coal-fired power plant in Sines closed in January 2021, and the Tejo Energia Pego power plant closed on the 30th of November 2021. The country has also developed a hydrogen strategy to decrease natural gas imports and reduce greenhouse gas emissions by 2030.
Between January 1st and May 31st of 2023, 18,751 GWh of electricity were generated from Continental Portugal, from which 73.2% came from natural resources (sources (30.5% wind, 28.30% hydro, 7.6% bioenergy and 6.8% solar). Other sources include: Natural Gas (15.9%), Fossil CHP (4.7%), and Pumped Storage (6.2%).
According to the Portugal 2021 Energy Policy Review, the NECP indicated that to achieve 2030 targets, the installed capacity of renewable energy generation needs to grow from 14.1 GW in 2019 to 24,7GW by 2030. The primary renewable energy sources include hydro, wind, solar, and biomass. To speed up the deployment of solar projects, the government is also set to stop environmental impact assessments for sites with a capacity lower than 50MW.
Portugal continues to be an attractive market for the development of renewable energy. However, decision-making tends to be bureaucratic and collaborative relationships with local companies are considered the most appropriate strategy for entering the Portuguese market. Any major project will mostly require some joint venture. A sustained local presence, product exposure, or track record in the renewable energy industry will also be a significant asset while the market develops.
A recent example is the solar auctions, the first one launched in 2019, which awarded 1,400 MW at an average tariff of 20.4 euros per MWh, where the lowest reached 14.7 euros per MWh. The second auction to award 700 MW was held on August 24 and 25, 2020. In 2022, Portugal’s first floating solar auction closed with a world record low-price. As EDP was among the winning bids, they plan to install floating solar panels at the Alqueva dam, generating an additional 14MW of solar and 70MW of wind by 2025. Portugal’s floating PV tender was projected to produce 262MW of capacity at seven dams throughout the country.
|Installed Capacity (MW)
|Urban Solid Waste
Source: DGEG May 2023
|Electricity Produced (GWh)
|Urban Solid Waste
|% of Renewable Energy (Real)
|% of Renewable Energy (Directive 2001/77/EC)
Source: DGEG March 2023
The government is promoting an industrial policy around hydrogen and renewable gases based on the definition of a set of public policies that guide, coordinate and mobilize public and private investment in projects areas of production, storage, transport, and consumption of renewable gases in Portugal.
According to the Government, Portugal has a competitive advantage over other countries due to its lower electricity production costs and considers that hydrogen production, through electrolysis, is only competitive if electricity prices are around or below 25 euros per MWh. The National Strategy for Hydrogen (EN-H2) has the primary objective of creating stability through the gradual integration of hydrogen as a pillar of sustainable energy. This has generated interest from local and foreign companies to develop hydrogen projects and look for synergies and partnerships.
The government’s main objective is to incorporate hydrogen as a sustainable and integrated pillar linked with various economic sectors and is in line with the strategy of transition to a decarbonized economy. This has generated interest from local and foreign companies to develop hydrogen projects and look for synergies and partnerships.
There are opportunities for U.S. companies to participate in Portugal’s emerging hydrogen cluster. U.S. investors and exporters of technology, parts, or components for the hydrogen sub-sector can take advantage of the favorable business environment. Portugal aims to develop a new hydrogen cluster to produce green hydrogen using renewable-powered electrolysis that splits water (H2O) to make environmentally friendly hydrogen (H2) gas that can be used in zero-emission energy generation applications.
Sines will receive an investment of 1.3 billion euros in a project of hydrogen and ammonia produced from renewable sources, led by the Portuguese-Dutch company Madoqua Ventures and supported by the Danish Copenhagen Infrastructure Partners and Dutch Power 2X. Sines’ proximity to the ocean and availability of deep-water ports along with transportation infrastructure make it the ideal location for this project. It will allow the annual production of 70 thousand tons of green hydrogen, creating 500 direct and indirect jobs.
Portugal was the first European country to receive U.S. liquefied natural gas (LNG) via the Port of Sines in 2016. According to the latest statistics from the U.S. Department of Energy, Portugal has received 23.32 million cubic feet from the U.S. between January and April 2023. The country currently ranks 16th worldwide (and86th in Europe) with 1.9% of total imports of U.S. LNG. In 2022, Nigeria was Portugal’s largest supplier followed by the United States, however from January to April of 2023, the U.S. has been Portugal’s largest LNG supplier. In 2019 Portugal’s peak number of ships was 67, increasing to 71 carriers in 2022, each supplying roughly 145,000 cbm of LNG in Sines.
There are opportunities for U.S. and Portuguese investors to further expand the infrastructure at the Port of Sines due to its strategic position for LNG exports to Europe. Portugal can act as an Atlantic LNG service station for vessels that use this energy source, using Sines’ port complemented with LNG floating bunkering units and/or ship-to-ship transfer solutions. The country operates a virtual LNG pipeline between mainland Portugal and the Island of Madeira, which uses LNG ISO containers transported in a conventional containership alongside other commodities, cutting LNG shipping costs. This concept can be further developed for LNG short-sea shipping to other regions lacking pipeline infrastructure.
Portugal is a small country with diverse mineral resources. It is one of the EU’s significant copper, tin, lithium and tungsten producers and a global producer of marble, limestone, and granite. According to the Directorate-General for Energy and Geology (DGEG), in 2021, the Portuguese mining industry had a production value of 1,080 million euros and an export value of 1,144 million euros that employed 8,815 workers. In 2021, there were 735 active quarries and bottling/hydrotherapy mines.
The government is also committed to further developing the industry, namely a cluster around the lithium and battery industry, which includes a tender for the concession of new prospection licenses. These may lead to the construction of lithium hydroxide refineries, battery materials laboratories, and the technology and equipment necessary to extract and process lithium.
Portugal has the 6th largest reserves of lithium in the world and the government wants to ensure that value stays in Portugal from lithium mining and refining to battery technology. In doing so, they have committed to developing a tender for the concession of new prospection lines. These developments may lead to the construction of lithium hydroxide refineries, battery materials laboratories, and the technology and equipment necessary to extract and process lithium. Although beneficial for energy production, the mine’s must be properly regulated as a means of ensuring environmental health.
When mining in Portugal, the specifications granting rights to mine and search insist that the lithium also be processed in Portugal as well as not being sold raw. The bid also requires that there be “a social benefit plan for the prospecting phase”. To aid the development of lithium mining, António Costa suggests that Portugal work with Spain to “develop together a strategy to jointly enhance a resource that, even though this is the largest European reserve, it is still not enough”. The National Laboratory of Energy and Geology (LNEG) states that modern lithium mining only carries minor environmental risks. Whether recycling water used during extraction or mixing open-pit and underground mining, there are implementations available to avoid local damage.
According to the IEA Portugal Energy Policy Review, the government sees a role for Portugal to play in offshore wind generation and has approved six sites for floating offshore wind deployment. Wind generation is one of Portugal’s most promising renewable energy sources and by the end of 2021, 5,628 MW of wind energy was operating in the country, 37% of the national renewable energy production.
The sector is very receptive to technological advances, which presents opportunities for market entry via collaborative research or partnerships with local companies.
U.S. products and solutions enjoy a good reputation in terms of reliability and high quality. Nevertheless, purchase decisions are based on several factors, including cost, availability of financing, after-sales service, and technology transfer. Obtaining up-to-date information on market dynamics is very important, given the fast-developing nature of the industry and the constant introduction of new technologies.
Portugal continues to play a significant role in Europe’s energy mix to improve Europe’s energy security and increase competition. Portuguese companies are also looking for partnerships at all levels.
The renewable energy sector will continue to be active due to the Portuguese government and EU commitments to reduce oil dependency and greenhouse gas emissions. U.S. manufacturers and exporters of parts and systems for large and small hydropower, controls, pumps, valves and monitors, biomass or biogas technology, engineered components and systems, low-cost solar water heaters, grid-connected solar kits, among other solutions, should seek the assistance of the U.S. Commercial Service in Portugal.
Leading Products – NAICS
- Hydroelectric Power Generation – 221111
- Wind Electric Power Generation – 221115
- Biomass Electric Power Generation – 221117
- Solar Electric Power Generation – 221114
- Other Electric Power Generation – 221118