Growth in the Portuguese renewable energy market continues to be sluggish, with the country's embattled economy weighing on prospects in the power and renewables industries. The wind sector dominates the renewables mix, providing 25% of total generation, with biomass coming in second at 6.6%. We do not expect growth to pick up markedly as investor sentiment remains low and the renewables project pipeline is limited.
Portugal has been pursuing a green energy agenda since 2001, adopting the E4 Programme (Energy Efficiency and Endogenous Energies) in the same year. This set goals for renewable power generation, in line with the wider EU Directive on renewable energy. The target was set at achieving a 39% share of renewable energy sources for gross electricity consumption by 2010, and a 31% share of renewable energy sources for total energy consumption by 2020. However, Portugal has since upped these targets and now aims to reach a 60% renewables share in its electricity production by 2020.
Overall, wind continues to be the main focus of the non-hydro renewables sector in Portugal and we expect it to contribute the lion's share to the renewables capacity and generation mix over the next decade. We expect wind capacity to increase by 12.3% (on the 2015 level) and reach 6.93 gigawatts in 2024, which is over 82% of the total non-hydro renewables capacity.
Key Trends And Developments
Owing to heavy rains and strong winds, Portugal's output from renewable energy (including hydropower) met the country's targets several times during 2013. According to Portuguese grid regulator Redes Energeticas Nacionais, the country achieved 70% renewables generation for the first three months of 2013 and 72% in June 2013 alone.
According to the European Wind Energy Association, Portugal's wind capacity additions over 2013 were just 195 megawatt (MW).
Despite large potential, we only expect solar capacity to grow from the estimated 231MW in 2014 to 630MW in 2024 and account for just 2.5% of country's total generating capacity.
In August 2013, French utility GDF Suez decided to sell 50% of its 3.3GW power and renewable energy portfolio in Portugal. This move was expected to enable the company to pay down its debt burden of EUR900mn by end-2014 and continue to operate the assets.
The Moura solar panel factory, built by Acciona at a cost of EUR7.6mn, aims to expand its business and infiltrate the international solar panel market. If successful, interest in the country's solar sector may increase and encourage international players to enter the market.
We expect the 12MW Pico Alto field geothermal project on Terceira Island to come online in 2016.