Sharing renewable energy success stories
Ten years on from the last tender for the allocation of power injection capacity in the Public Service Power Grid for wind power plants launched in 2008, it is now the time for the photovoltaic solar power to shine, taking advantage of the moment the sector is going through towards decarbonisation and energy transition, with well-defined objectives and targets by 2030. And indeed the goals of the National Energy Climate Plan (PNEC 2030) could not be more ambitious: a reduction in greenhouse gas emissions between 45% to 55% compared to 2005, a 35% reduction in primary energy consumption, an increase in the share of gross final consumption of renewable energy to 47% and a 15% electricity interconnection target.
The success of the bidding procedure auction, launched in July ordered by the Secretary of State for Energy and managed by DGEG, both in terms of participation and results (so far the world's cheapest tariff) has turned Portugal in a very attractive destination for investments, not only in the production chain and in the installation of industrial units but also in other business units that may benefit from increasingly cheaper energy.
Another factor that certainly contributed to the success of this operation was the publication of Decree-Law No. 76/2019 of June 4 shortly before, which revised the regulatory framework applicable to the activities of production, transportation, distribution and commercialization of electricity and the organization of electricity markets, introducing simplified mechanisms in the design and operation of competitive procedures, referring much of the auction rules to the parts of the procedure.
The mechanisms introduced by Decree-Law No. 76/2019 altered the rules for access to a scarce resource: “the availability of electricity reception by the grid”, by matching the producers' expectations and the technical and human resources availability of the Public Administration, to the capacity effectively existing in the electricity grid, contributing to the reduction of uncertainty and speculation. This meant that as from June 4, the start of the licensing procedure will depend on the prior allocation of the injection capacity reserve in the grid, formalized by issuing a capacity reserve title, awarded by the transmission system operator (REN) or distribution system (EDP Distribuição), without which any other initiative will be, to say the lest, extemporaneous.
In the auctions for the construction of 1400 MW of new photovoltaic power plants, of which 1150 MW were awarded, 64 companies participated, competing for 23 out of the 24 lots offered, with bids well below the current price of electricity in the Iberian market, and generally less than half of the auction reference price. On average, the remuneration of the auctioned lots was around 20.89 €/MWh, significantly lower than the current spot market price, allowing a significant gain for the system and, over time, for the electricity consumers.
Taking into account the success of this competitive procedure and without prejudice to the adjustments that necessarily have to be made, new auctions are already being considered for 2020.
The replication of this and other success stories in Portugal must go beyond the borders of the Portuguese energy landscape and be available to countries with which we have established protocols, memoranda or cooperation agreements. The purpose of DGEG, which is to contribute to the design, promotion and evaluation of energy policies, has in this chapter an additional responsibility to implement the cooperation protocols it has with the African Portuguese-speaking countries.
In order to put this objective into practice and to get cooperation intentions out of the paper, the official bodies have to expose themselves and ensure the establishment of communication channels, with the competent support of the associations and organizations operating in this area.
ALER, whose genesis I had the privilege to accompany, is one of those associations that has played a major role in promoting renewable energies in the Lusophone countries, evidenced in all the initiatives it has already launched or accompanied, as well as the capacity to attract Members and partners due to the quality of the results achieved, with a central and important role in the area of renewable energies.
Aware of the strategic importance of ALER, DGEG could not but invite this association to accompany us on the institutional mission that we will carry out to Cape Verde, from 14 to 17 October. We are convinced that it will be a first of many partnerships in this field.
Dr. João Correia Bernardo
Director General of Energy and Geology of Portugal