BMI forecasts Portugal's economic recovery will continue during the period 2016-2024, but will remain unremarkable, registering GDP growth rates of 2.61% in 2017 and 1.07% by 2022, a substantial improvement on the 4% contraction the country experienced in 2012. Renewables investors will be encouraged by this, and by government progress on making early repayments on the loan it received from the IMF in 2011.
As indicated in BMI's previous Portugal Renewables Report, these developments are already bearing fruit, as shown by the upgrading of state utility Energias de Portugal (EDP) and state grid company Redes Energeticas Nacionais (REN)'s investment status. An improved economic climate will encourage investors and developers to take advantage of the country's well-structured regulatory framework and the government's welcoming attitude towards renewables.
That said, owing to continuing difficulties in raising finance and EDP's considerable debt burden, BMI's forecast for growth in the Portuguese non-hydropower renewables sector remains modest, although slightly more optimistic than our forecast during the previous quarter. BMI's research suggests generation from non-hydropower renewable technologies will increase by an average rate of just over 2.9% between 2016 and 2024, a considerable improvement on the 1.67% we forecast during the previous quarter. This will result in an increase in output from 16.87 terawatt-hours (TWh) in 2016 to 20.90TWh in 2024, taking the country's total power output from 31.93% to 36.84% during the period.
Generation from wind power has historically dominated Portugal's non-hydropower renewables sector, and the country will generate some 12.73TWh in 2016. However, BMI's research does not suggest we will see the kind of substantial additions to wind capacity in Portugal as we have witnessed during the past 10 years, with output from wind increasing at an average yearly rate of 2.36% to 15.11TWh by 2024.
By contrast, there has been considerable activity in Portugal's solar sector, and BMI forecasts there will be a y-o-y average increase in output from solar of almost 10% during the period 2016-2024. In terms of output, this will mean an increase from 0.72TWh in 2016, to 1.51TWh by 2024. The country's solar sector has seen the most activity during the past quarter, including a licence application in December by Portuguese company Muki for up to 1 gigawatt (GW) of solar units. This has yet to be approved, but could stand to increase the country's solar-installed capacity fourfold, from the 243 megawatts (MW) worth of units it has now.
In other areas of non-hydropower renewables, there will be limited activity except for the commissioning of an expansion of the Azores Archipelago's Pico Alto geothermal power plant, the only one in the country. The expansion will commission during 2016 and will increase generation from geothermal from 25MW to 38.68MW. The government of the Azores continues to be something of a trailblazer in terms of renewables. It plans to generate 56% of its electricity from renewable technology options by 2020.
News And Developments
During 2016, Portugal's total generation from non-hydropower renewables will be 16.87TWh, which represents some 33.39% of total electricity generation, marginally higher than 2015's 31.93%. Non-hydropower renewables' share of total generation is forecast by BMI to increase to 36.84% of total output by 2024, reaching 20.90TWh, generated from 7,286.37MWs' worth of units. This is equivalent to a y-o-y average increase of just over 2.9%.
BMI's outlook for the Portuguese renewables sector is more optimistic than during the previous quarter. The country's repayment of its debts, particularly to the IMF has resulted in increased investor confidence. We forecast output from renewables to increase by a y-o-y average rate of 2.9%, rather than the 1.67% forecast during the previous quarter.
In December 2015, Portuguese renewables developer Muki Solar submitted a licence application for 1GW's worth of solar projects to the General Directorate for Energy and Geology.
In November, EDP came to an agreement with four partners to develop the 25MW Windplus floating offshore wind project, which is scheduled to commission in 2018. The project is receiving USD27.2m from the European Commission.
In late October 2015, EDP took full ownership of 613MW's worth of wind capacity, previously owned by the Eolicas de Portugal consortium, formed of EDP, Italy's Enel Green Power and Genergy. The takeover had been approved in August, and will raise EDP's renewable capacity in the country to 1,243MW.
In October 2015, Portuguese company Grupo DST announced it would invest USD3.5m to expand its 240MW Alto Minho I wind farm.
The Pico Alto geothermal development on Terceira Island will be expanded during 2016 from 25MW to 38.68MW. The Azores government has also announced it will invest USD24.2m during 2016 to boost renewable developments on the islands. The Azores government aims to achieve 56% renewables generation by 2019. When the Pico Alto expansion commissions, it will be around 30%.
|f = BMI forecast. Source: EIA, National Sources, BMI|
|Generation, Non-Hydropower Renewables, TWh||15.063||16.139||16.866||17.501||17.924||18.263||18.574|
|Generation, Non-Hydropower Renewables, % y-o-y||4.840||7.142||4.509||3.761||2.422||1.889||1.705|
|Capacity, Non-Hydroelectric Renewables, MW||5,772.8||5,980.5||6,183.3||6,366.2||6,550.3||6,700.2||6,818.7|
|Capacity, Non-Hydroelectric Renewables, % y-o-y||4.4||3.6||3.4||3.0||2.9||2.3||1.8|
The Portugal Renewables Report researched at source contains BMI Research's assessment of the current renewables market in Portugal. The report also contains historical data together with forecasts to end-2018 covering electricity generation (TWh) and electricity capacity (MW).
The renewables sectors covered in the report include Wind, Solar, Geothermal, Tidal and Wave, and Biomass (See Table of Contents for exact coverage). The report also features details on government green energy agendas and funding opportunities, as well as presenting a detailed list of key renewables projects currently being planned or undertaken in Portugal, their capacity, the timeframe of construction and their current status.
The report discusses the various energy policies currently in force, including targets, subsidies and the relevant infrastructure developments or limitations which might impact on renewables growth, analysing the potential effects of regulatory changes in conjunction with the background macroeconomic outlook. Finally, there is a general overview of the competitive landscape in Portugal, together with a detailed summary of the main utilities and manufacturers present and their business operations.
BMI's Portugal Renewables Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with unique independent forecasts and competitive intelligence on the Portugal renewables industry.
- Benchmark BMI's independent renewables industry forecasts for Portugal to test other views - a key input for successful budgeting and planning in the renewables market.
- Target business opportunities and risks in the Portugal renewables sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in the country.
BMI Industry View
Summary of BMI's key industry forecasts, views and trend analysis covering the renewables market in Portugal, regulatory changes, major investments and projects and significant multinational and national company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the renewables sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2010-2012) and forecasts to end-2018 for electricity generation (TWh) and electricity generating capacity (MW) for each individual renewables sector present in the country.
These in turn are broken down into:
Electricity Generation: Overall capacity (TWh), growth % change year-on-year, KWh per capita, % of Total Non-Hydropower renewables generation, % of total electricity generation.
Electricity Capacity: Overall capacity (MW), growth % change year-on-year, % of non-hydroelectric renewables capacity and % of total capacity.
These forecasts are in turn supported by explicit assumptions, in conjunction with analysis of the key risks to the main forecast.
Business Environment Rankings
BMI's Renewables Business Environment Rankings provide fully comparable Risk-Reward Rankings aimed at investors in the regional renewables market.
The rankings methodology makes sophisticated use of various industry, economic and demographic data point.