Low Carbon Energy Production – Portugal is Walking It

Although the Portuguese economy might not be doing so well, Portugal does score very highly in one particular sector. Portugal is streets ahead of other countries in producing renewable power, and around a quarter of its electricity is generated in this way, something that is likely to save the economy €9 billion over the next 20 years.

Renewable energy resources, especially wind farms, are cutting energy bills and reducing the carbon footprint of Portugal while in comparison Germany recently announced it is to build 10 new coal-fired power stations to replace nuclear power.

Renewable energy in Portugal has more than doubled in just 10 years, increasing from less than 5 GW in 2001 to reach just less than 11 GW last year. In 2001 renewable energy accounted for just 3% of electricity production, but by last year this had risen to 25%.

Wind energy accounted for 93% of Portugal’s electricity usage at one point, although admittedly this was at 4:30 AM in the morning. During the last decade Portugal’s use of fossil fuels has declined from 60% to less than 40%, and imports have fallen for five successive years.

The impact of renewable energy has meant Portugal saved €400 million between 2005 and 2010. Portugal has the world’s largest solar farm, and has Europe’s largest wind farm. It also has an impressive hydroelectric dam infrastructure. Just recently a Finnish company built a machine which is anchored to the ocean floor just north of Lisbon, and which utilises wave energy.

These types of projects could provide many jobs within the green energy sector in Portugal. In the past the Portuguese government used to give subsidies for electric vehicles and domestic solar panels, but these have been cut during the recent austerity measures.

Portugal Begins to Deregulate Energy Market

Portugal is preparing to liberalise its energy market, and domestic electricity prices are expected to increase by 2.8% next year. The increase is being proposed by the Entidade Reguladora dos Servicos Energeticos (ERSE), and would represent an increase of an extra €1.24 on the average monthly bill of €47.

This tariff will operate from the beginning of January until the end of March next year, and further price updates will be given at three monthly intervals until 2015, by which time it is expected that the electricity market in Portugal will be completely liberalised.

The energy market in Portugal is being deregulated as part of an agreement between the Portuguese government and the Troika, in an effort to try and cut the country’s budget deficit. The increase will affect around 5.6 million domestic consumers, and a similar proposal for an increase in tariffs for natural gas is expected to be made in December. Those on lower incomes will see their electricity bill increase by a lower percentage which will remain the same for the whole of next year.

A succession of governments have continually protected domestic consumers from paying the true cost of electricity though regulated price fixation, which has led to an electricity tariff deficit of around €1 billion. This deficit is expected to take another eight years to resolve. Apparently the ERSE will continue to recommend energy tariffs to try to ensure that the deregulated market has a tariff reference, helping to prevent huge price increases during this transitional phase.