Global Solar PV Market Report

Portugal’s long-term goal to generate 47% of its gross final energy consumption from renewable sources by 2030 is the primary demand driver for solar deployment. The country now aims to reach 9GW of solar by 2026, which translates to roughly 1.6GW of capacity addition every year. To achieve this, the country introduced a long-term plan called ‘Roadmap to Carbon Neutrality 2050’. In 2022, the government also announced that it plans to mobilise €25 billion in the next 10 years to expand its renewable capacity.

With  the  European  Commission’s  proposal  to  promote solar PV installations in buildings, Portugal’s decentralised solar PV capacity could grow significantly. To promote the deployment of decentralized solar PV systems on residential rooftops, the Portuguese government offers two financial incentives. One of them is the “Vale Eficiência” programme (efficiency voucher programme), which will distribute 100,000 “efficiency vouchers” of €1,300 + VAT by 2025 to economically vulnerable families, reducing energy poverty and strengthening the renovation of buildings, including solar panels. The other programme is the “Apoio Edifícios + Sustentáveis” (Support + Sustainable Buildings programme) which has a contribution rate of 85% up to €2,500 for the installation of PV panels, with or without storage.

Among other things, auctions have been a strong driver for solar deployment. The auction model was used to ensure compliance with proposed targets in the most cost-effective manner. So far, 2.3GW have been auctioned for injection points to connect power plants where there is still grid availability or where expansion is planned. Besides that, the Decree-Law No. 15/2022 published at the beginning of 2022 introduced two new modalities that will allow the optimisation of the connection point: repowering (until 20% of the injection capacity) and hybridisation. It is expected that several wind farm operators will install solar PV power plants in the following years to maximize the amount of electricity they put into the grid.

Historically, physical PPAs were the most common in Portugal, but financial PPAs are becoming more common lately. Also, merchant solar routes have become increasingly popular in the country, allowing producers and offtakers to negotiate freely. The prior government attempted to define a policy framework for merchant renewables facilities, but the apparent looseness of the permit regime led to a flood of applications. The Direção Geral de Energia e Geologia (DGEG) halted the processing of merchant solar project applications in March 2020, resulting in the benching of a mammoth 253GW capacity. To unlock the held-up potential, Decree-Law No. 30-A/2022 creates a temporary regime that permits power plants to operate without an operation licence or operation certificate if grid injection conditions are ensured by the grid operator. Among notable deals, Statkraft signed a PPA with NextEnergy Capital’s solar fund NextPower III ESG in Portugal to procure electricity from 210MW of solar PV plants currently under construction.

Portugal has a greater capacity waiting for permits than it has installed so far. There are 1.1GW of production permit requests in the country and another 3.2GW of solar PV awaiting an operating permit. These figures provide insight into the withheld capacity that will be unlocked, offering a plethora of opportunities to investors and operators. The investment injected by Portuguese government in support of international institutions is broadening the spread of the solar activities in the country. In June 2021, European Commission (EC) endorsed Portugal’s €16.6 billion recovery and resilience plan, of which 38% will be allocated to the climate objectives.

Also increasing at a promising rate is the capacity of decentralised solar PV, mostly for self-consumption. The first big jump occurred in 2019 when Portugal installed 110MW, bringing the total to 429MW, up from 176MW in 2015. The years 2021 and 2022 were the most productive for decentralised solar PV, with 210MW and 296MW being added respectively, aggregating to 1GW. In the next few years, decentralised solar PV is anticipated to grow at a rate of 250MW per year on average, following the pattern seen in 2021 and 2022.

According to the national energy-saving plan, the country aims to add 2.6GW of new solar capacity by the end of 2023. In this context, energy storage will prove pivotal if the country hopes to achieve its solar installation goals. Along with this, the booming hydrogen sector would also provide significant investment opportunities in renewable technologies since most of the electricity used for electrolysis will come from wind and solar power.

Floating solar systems are perfectly suited for the country’s dams and other water bodies, and researchers from Évora University have found that the installed capacity may exceed the 7GW target outlined in the country’s National Energy and Climate Plan 2030. In May 2023, the Empresa de Desenvolvimento e Infraestruturas do Alqueva (EDIA), controlled by the Ministry of Agriculture of Portugal, launched an international tender for the construction of 5 floating PV plants to capitalise on the untapped potential. A total of €4.3 million will be invested in the five projects, which will have a combined capacity of 4.5MW.