Portugal, as part of the EU, is a signatory to the Paris Agreement and is required to contribute to the bloc-wide overall targets of reducing GHG emissions by 40% below 2005 levels and increasing the share of renewable energy to 32% of gross final consumption.

In line with these targets, the country’s National Energy and Climate Plan published in 2018, has set a target of 47% renewable energy in gross final consumption in the country. The plan puts a lot of focus on solar PV capacity building due to competitive prices and abundance of the resource. The plan envisages a cumulative capacity of 8.1 GW to 9.9 GW of solar PV capacity by 2030.

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The government has held two rounds of auctions in June 2019 and September 2020. Both rounds not only were successful but also witnessed record low bid prices. The first auction, held in June 2019 saw a bid price of $16.54/MWh which was then the lowest ever in the world beating the previous record of $16.95/MWh at an auction in Brazil. This auction was held for 1.4 GW capacity and 1.15 GW capacity was awarded. Later, amid the Covid-19 pandemic, after a delay, the second auction was held in September 2020, where 700 MW capacity was auctioned, and 670 MW was awarded. This auction was a combined solar + storage auction and the lowest bid for solar PV capacity was $13.16/MWh which is currently the lowest ever globally.

Portugal is estimated to add 9.2 GW of new power capacity during 2021–2030. Over 80% of this capacity is set to come from new solar PV installations allotted through the auction mechanism. During the same time the only two operable coal fired plants (that are currently temporarily shut due to the pandemic) are set to be decommissioned. Due to the high irradiance levels and low cost of solar PV modules, the levelized cost of solar PV generation is less than the wholesale electricity price in Portugal and in a few other European countries. Added to this, Portugal’s auction system gave bidders the flexibility to choose between two remuneration models meaning power producers could pick the model that suits them best. Due to these reasons, power producers showed confidence and rushed to secure capacity in Portugal. More rounds of auctions are set to be held during 2021–2030 in order to achieve the desired capacity.

The following chart shows the estimated annual capacity addition of solar PV in Portugal during 2021–2030.

Solar PV Market, Portugal, Annual Capacity Addition (MW), 2021–2030

Source: GlobalData Power Database [Accessed on 05 January, 2020]