The Portuguese Government approved the Offshore Renewable Energy Zoning Plan (PAER) on January 9th, with the aim of identifying suitable areas for the development of offshore wind farms within the national maritime space. The plan also includes an assessment of the potential environmental impacts of these infrastructures, to ensure they reconcile activities, particularly commercial fishing and environmental conservation.
This plan is part of the National Energy and Climate Plan 2030 (PNEC 2030), which sets targets to decarbonize the economy and promote renewable energy, targeting a 47% share of renewable energy in gross final energy consumption by 2030. Initially, the Government set a target of 10 GW of offshore wind capacity by 2030. However, after reviewing the PNEC 2030, this target was adjusted to 2 GW only, by the end of the decade.
The PAER version submitted for public consultation in 2023 identified six potential areas for the installation and development of offshore wind farms: Viana do Castelo North and South, Leixões, Figueira da Foz, Ericeira, and Sines.
The offshore wind auction, initially scheduled for 2023, was postponed due to the technical complexity and the absence of necessary approvals for seabed use for offshore wind farms. Following the recent approval of the PAER, the first auction is anticipated to be launched in 2025, for 2 GW of capacity by 2030. The EU plans to expand offshore wind energy from 3% to 25% of its electricity consumption by 2050. Portugal is starting to align with this goal, with just 25 MW of capacity currently installed off the coast of Viana do Castelo.
The approval of the PAER enables the development of offshore wind energy in Portugal, as it will update and be automatically incorporated in the National Maritime Spatial Planning Plan (PSOEM), which designates the areas for the different maritime activities. According to the latest comments from the Portuguese Minister of Environment and Energy, the offshore wind energy auction will take place in two phases:
- First phase: Seabed rights will be granted for a defined duration enabling developers to conduct studies and assess the area, subject to the provision of a guarantee payment.
- Second phase: An auction will be held for Contracts for Difference (“CfD”), where a reference price will be set for the purchase of the energy produced. Under this model, when the market price falls below the reference price, the government compensates the energy producer for the difference. Conversely, when the market price exceeds the reference price, the producer must reimburse the difference.
The choice of a two-phase auction is justified by the limited maturity of floating offshore wind technology, which is not yet fully developed. The additional time allocated to study the areas will help accurately predict the project’s financial return, which is crucial for securing financing. A one-phase auction, on the other hand, would speed up the process but involve higher risks, such as inflating prices or having no participants in the auction if the CFD does not offset the risks.
According to estimates from APREN, the Portuguese Renewable Energy Association, the installation of 2 GW of wind capacity by 2030 represents an estimated investment of approximately 9 billion euros. It is also expected to contribute up to 1.7 billion euros to GDP and create between 5,000 and 13,561 new jobs.
For information on the licensing process for maritime space, you can consult our Offshore Wind Power Production Licensing in Portugal.