20160331-IEA-Energy_Policies_of_IEA_Countries_Portugal_2016_Review_162页_2mb

Summary of the 2016 Energy Policies of IEA Countries Review: Portugal

Core Content

The 2016 Energy Policies of IEA Countries review provides an in-depth analysis of Portugal's energy policy developments since the last comprehensive review in 2008. The report highlights Portugal's progress in promoting energy security, sustainability, and efficiency, as well as its efforts in integrating into European energy markets.

Main Objectives of the IEA

The International Energy Agency (IEA) aims to:

• Promote energy security through collective responses to oil supply disruptions.
• Provide authoritative research and analysis on reliable, affordable, and clean energy.
• Enhance market transparency through energy data collection and analysis.
• Support global collaboration on energy technology to secure future energy supplies and reduce environmental impact.
• Address global energy challenges through engagement with non-member countries, industry, and international organizations.

Key Policies and Measures in Portugal

Energy Policy Overview

• Portugal has continued to reform its energy policy despite economic challenges.
• Key achievements include increased renewable energy deployment, market liberalization, and greater emphasis on energy efficiency.
• A new energy strategy was developed based on Cabinet Resolution 20/2013, aiming to align with national and European objectives.

Energy Efficiency

• The National Energy Efficiency Action Plan (NEEAP) was integrated with the National Renewable Energy Action Plan (NREAP).
• The new NEEAP set a 25% reduction in primary energy consumption by 2020 and a 30% reduction in state-owned sector energy use.
• The Directorate-General for Energy and Geology (DGEG) coordinates the implementation of these policies.

Renewable Energy

• Portugal's renewable energy (RES) contribution to total gross final energy consumption was 31%, with 59.6% from electricity, 35.9% from heating and cooling, and 11.3% from transport.
• In 2014, RES accounted for 63% of installed electricity generation capacity and 61.3% of final electricity supply.
• Support mechanisms for RES include feed-in tariffs and simplified licensing for micro- and mini-generation.

Climate Change

• Portugal has set an ambitious 20% greenhouse gas (GHG) reduction target compared to the EU-Effort Sharing Decision's 1% increase.
• The National Low Carbon Roadmap (RNBC) and the Strategic Framework for Climate Policy provide a foundation for long-term GHG reduction.
• A general carbon tax was introduced in 2015 as part of a broader green fiscal reform.

Market Developments

Electricity Market

• The Iberian Electricity Market (MIBEL) has been successfully implemented, indicating the need for an Iberian Natural Gas Market (MIBGAS).
• The electricity market operator (OMIP) offers a mature range of services, including forward prices and financial transmission rights.
• Portugal and Spain have made progress in increasing interconnection capacity, with 3.0 GW of interconnection by 2020 and 85% price convergence.
• In 2014, Portugal increased its interconnection with France, contributing to better grid management and renewable integration.

Natural Gas Market

• The natural gas market has seen progress in infrastructure and network improvements.
• The third interconnection between Portugal and Spain was identified as a Project of Common Interest (PCI) by the European Commission.
• The MIDCAT project (Spain-France interconnection) also received PCI status.
• Portugal's natural gas network is still somewhat isolated, with limited interconnection with France and other European countries.

Tariff Deficit and Reforms

• Portugal faced a significant electricity tariff deficit, estimated at EUR 4.69 billion (3.1% of GDP) by the end of 2014.
• The tariff deficit was primarily due to subsidies for renewable energy and low retail tariffs.
• The government has implemented a series of reform measures, including revising special tariffs for renewables and phasing out regulated tariffs, with the goal of eliminating the deficit by 2020.
• The extension of regulated tariffs to 2017 has added complexity to the reform process.

Recommendations

• Continue implementing flexible energy policies to address uncertainty in demand and EU-level developments.
• Ensure swift implementation of all measures to reduce the tariff deficit and identify further cost-saving opportunities.
• Work closely with Spain and the European Commission to develop key transmission infrastructure, particularly interconnections with France, to enhance market integration, renewable energy integration, and energy security.

Key Data (2014 Estimated)

Country Overview

• Portugal is located on the west coast of continental Europe, in the Iberian Peninsula.
• Borders Spain to the north and east, and the Atlantic Ocean to the west and south.
• Major cities include Lisbon, Porto, Braga, and Coimbra.
• Includes the autonomous regions of the Azores and Madeira.
• Governed by a parliamentary republic based on the 1976 constitution.
• Population: ~10.39 million, area: 92,212 km².

Economic Context

• Portugal experienced a severe economic crisis, leading to high unemployment and public debt.
• The government has implemented structural reforms to rebalance the economy towards the export sector.
• Economic recovery has been gradual, with moderate unemployment reduction and continued economic slack.

Challenges and Risks

• Continued focus on renewable electricity may lead to a further reduction in electricity demand, which could increase feed-in tariff costs and electricity prices.
• The need for careful management of renewable capacity additions, especially for small-scale hydropower and wind, to control the tariff deficit.
• Limited interconnection with France and other European countries may hinder market integration and access to more cost-effective energy solutions.

Conclusion

Portugal has made significant strides in developing a sustainable and efficient energy policy, with a strong emphasis on renewable energy and energy efficiency. However, challenges remain, particularly in managing the tariff deficit and enhancing international interconnections to support long-term energy security and market integration. The government is encouraged to continue its reform efforts and ensure effective implementation of energy strategies.