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Portugal’s Future Looks Increasingly Green

Renewable energy sources accounted for 103% of electricity produced in Portugal in March, as the country ramps up its clean energy sources, creating economic gains as well as increased energy independence.

March was a landmark month for the Portuguese renewable energy sector with production exceeding demand for the first time in nearly 40 years.  Additionally, the country was powered solely by renewable energy for three days straight in mid-March. These impressive feats demonstrate that Portugal is well on its way to meeting its 2020 renewable energy targets.

As part of the Europe 2020 strategy, the EU enacted legislation in 2009 which included a commitment to achieving a 20% reduction in greenhouse gas emissions from 1990 levels. Under this plan, each member state was obligated to set national targets for increasing the share of their country’s total energy consumption accounted for by renewable energy.  In Portugal’s case, the 2020 target was set at 31%.

In terms of gross final energy consumption, Portugal has the 7th highest percentage of the incorporation of renewable energy sources among the 28 member states. The country’s bounty of natural resources and geographic location has enabled it to become a leader in the production of hydroelectric and wind power. These two sources alone made up 97% of electricity consumption in March. As a result, it is no doubt that Portugal will comfortably meet its 2020 renewable energy targets.

In additional to the environmental benefits, there are several other positive ripple effects that come with Portugal’s transition to a green economy.  The country does not have any fossil fuel reserves nor does it produce any nuclear energy. As such, it has been historically reliant on energy imports. However, a shift towards renewable energy minimizes this dependency and increases the country’s energy security.

While Portugal gains a high percentage of their renewable energy from the more than two-dozen hydroelectric dams it has scattered across the country, it is also the first country ever to have built a combined hydro-solar power station, which generates energy from both water and solar power. Copyright: Vitaly Fedotov/

The potential economic rewards of going green are also quite notable. For instance, Portuguese electricity prices are some of the highest in the European Union, due in part to the fact that power was generated from imported fossil fuels in years past. However, electricity prices will likely fall as a larger share of energy is produced domestically. This, in turn, will increase citizens’ disposable income and reduce operating costs for businesses. Furthermore, the European Union estimates that achieving the 2020 renewable energy targets could result in the direct or indirect creation of 100,000 new jobs.

While Portugal’s renewable energy sector has exhibited remarkable growth, the country’s sovereign debt crisis may undermine its future prospects. In order to achieve the spending cuts necessitated by its bailout agreement, the Portuguese government reduced its financial support for the renewable energy sector. Given the time lag associated with investment in renewable energy, it is possible that these cuts will limit the industry’s expansion in the coming years.

Since exiting the bailout program in 2014, Portugal has made a concerted effort to meets its environmental commitments.  In February, the government extended the approved area for a pilot project  that involves the construction of a new floating offshore wind farm. If successful, this ground-breaking technology could result in the creation of 1,500 jobs. In order to facilitate the shift away from fossil fuels, the government has also decided to suspend subsidies worth about €20 million a year for fossil fuel producers.

One of the key challenges faced by the renewable energy sector is Portugal’s underdeveloped energy infrastructure. A lack of interconnectors and storage facilities means that excess production of renewable energy is often wasted instead of being used by other countries. Portuguese Prime Minister Antonio Costa has expressed his desire to host a mini summit in 2018 with the Spanish Prime Minister Marion Rajoy, in order to specifically address this issue.

The future in Portugal is looking increasingly green. While the renewable energy sector has experienced some setbacks, last month’s achievement demonstrates the country is serious about weaning itself off fossil fuel imports. Moreover, Portugal’s success is a reminder to the rest of the world that the transition towards an economy based entirely on renewable resources isn’t beyond its reach.

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Katrina Pirner

Katrina is a Berlin-based freelance writer who focuses on economics, disruptive technology and politics. She’s previously worked in Canada, Italy, Belgium, and the US. Katrina holds a MA in International Relations from Johns Hopkins University where she concentrated in European political economy.

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