MV Conversations with João de Macedo Vitorino
With Lisbon touted as one of Europe’s Top 5 Start-Up Hubs, MV Conversations looks at the realities of Portugal’s Start-Up ecosystem and its true potential going forwards.
‘Start-up’ is a recent buzzword in Portugal. For the past few years, from the Government to the co-working spaces, people are embracing entrepreneurism and working towards living up to the hype of being one of the most promising innovation ecosystems in the world.
With Lisbon having recently hosted the Web Summit for the 4th consecutive year, bringing together investors and start-ups from around the world, the buzzword is again on the tips of everyone’s tongues.
One cannot forget, however, that the Portuguese start-up scene is still in its own incubation period, and for all the noise and attention we are yet to catch up to other hubs such as London, Berlin or Amsterdam, says João de Macedo Vitorino. Having got through the ‘seed stage’ and embracing its position in the ‘early stage’, Portugal’s ‘growth stage’ is yet to be conquered. “For this, one needs to look beyond a reliance on public funds and incentives, and follow the lead of other markets, as well as promoting and capitalising on the country’s traits that make it unique and conducive to a start-up ecosystem.”
Subsidies and Summits
In a bid to put Portugal on the start-up map, recent years have seen the Government drive through numerous initiatives and incentives to boost the start-up ecosystem and promote sustainable economic growth, innovation and opportunities. From a €200m venture capital fund aimed at boosting foreign investment in start-ups, StartUp Portugal (with over 20 initiatives for attracting new investment, talent and innovation) to a StartUp Visa for foreign entrepreneurs and tax incentives for non or new residents.
With over 70,000 attendees, the Web Summit has been a boost to various aspects of this country’s economy, such as tourism, and also created a demand for supporting facilities including incubators and accelerators.
Drawing investor attention to Portugal in any format is welcome, says João de Macedo Vitorino, whether via attractive initiatives, monetary benefits or events. But one needs to take these subsidies and summits with a pinch of salt, he adds. Many subsidies have a limited lifetime and an array of conditions that are very difficult to fulfil, while the Summit itself lasts four days and what we need is to ensure that our eco-system continues to attract ideas and investment for the rest of the year. “For that we need to promote the infrastructure we have in place to support it and the traits of our country and people – why Portugal is the right place to start up and invest.”
Market lessons
Looking to other markets that have started using similar public structures and subsidies to fund their start-up ecosystems, explains João de Macedo Vitorino, in the end you are attracting all kinds of ideas and paying for ideas which are not, or may not be successful when viewed from a market perspective. “If you look at the figures of the investments that were made in France this way, there were some tax companies founded and jobs created, but those jobs and those companies might have found better ways of existing and in a less costly way than by using public funds.”
If we look to the US, Germany or UK, these are of course far more dynamic markets, he says. “And their eco-systems have adapted. Big corporations have their own ideas and take their ideas to market, and they have started attracting entrepreneurs because they realize that it's much less expensive to invest in potentially good ideas than to have to buy them afterwards for a great deal of money. So the market itself created this thirst for new ideas and an environment that is favourable to seek and grow ideas from people who would not otherwise have the means to do it.”
These markets create solutions to cover gaps, such as corporations making their own labs, venture capital increasing and investing in diverse risks so they can invest more. “It's one thing trying to put ideas in people's minds or incentivising people to do things that they otherwise would not do,” explains João de Macedo Vitorino. “It is quite another to have a market where everyone is trying to succeed, sell their own ideas and invest in others.”
That is what the goal should be for Portugal, he adds. Ensuring the environment here is such that the market goes from publicly funded to a more self-sustaining one.
The Portuguese advantages
As the digital world tends to be focused on universal products, these days there are no frontiers for the digital economy. So you can really start anywhere, says João de Macedo Vitorino. “The key is to find an environment that supports your start-up, both the place and the people.”
He highlights the fact that the digital economy requires people that are open- and internationally-minded, free thinkers and flexible, who can move from idea to idea and adapt quickly and painlessly. “These are all Portuguese qualities that I believe make us more naturally capable to succeed in the digital world as we have in traditional commerce. It’s our natural way of being as a country and as a people, and if you do things against your own nature it becomes much harder. Working with a people who already possess these traits in their DNA is a distinct advantage.”
Portugal also benefits from having a very qualified and skilled work force of multi-lingual talent, and we are seeing this focus on our talent with big business establishing bases in Lisbon for their European operations, says João de Macedo Vitorino. Mercedes for example – and others who are especially taking advantage of Portugal’s young tech talent.
The country is also investing in infrastructure to support the start-up ecosystem with hubs opening across the country, such as the Beato Creative Hub, a large-scale incubator in the north of Lisbon for start-ups and other tech businesses, including the Daimler-Mercedes research centre. “And it is precisely this type of infrastructure, coupled with the people behind it, that will strengthen the foundations of our start-up ecosystem,” he says.
Additionally, with political uncertainty prevailing around Europe - Brexit being a case in point, this is a definite concern for any potential investors or entrepreneurs. Portugal’s stable political climate without a doubt plays a part in amplifying its attractiveness, says João de Macedo Vitorino.
“We have made great strides in getting Portugal on the start-up map, and while subsidies and summits are a good first step for Portugal’s start-up ecosystem, we now need to take this a step further,” he says. “We must look past exclusively publicly-supported environment and ensure that the Portuguese eco-system is an attractive marketplace of ideas and investment with the necessary infrastructure to support it for years to come.”
The Hub Criativo do Beato (HCB) is a modern startup hub in Lisbon under construction by the municipality of Lisbon. Located on the Tagus riverside in eastern Lisbon, its 20 buildings spread over an area of 35000 square meters are now being requalified to host both national and international creative and innovative technology industries.
Startup Lisboa will manage the entire HCB. Future tenants of the space will include the German group Factory, Mercedes-Benz (with its Lisbon technology hub Mercedes Benz.io) and Super Bock Group’s creative industry space and craft brewery.
MVA is advising Startup Lisboa on the tender for the Rehabilitation and Remodeling Contract for the future building of Startup Lisboa at HCB. The tender is set to rehabilitate a former bread and confectionery factory, covering an area of 7.000 square meters. The works contract has a base price of Eur 5.4 million. The works on the new Startup Lisboa building are expected to start by the end of March 2020 and to be completed within a year.
Interested parties should submit their applications until 12 PM on November 22nd 2019. In the first phase of the tender, ten companies will be selected to submit a proposal according to the building tender specifications. The tender program and ranking criteria can be found here.
The Portuguese Government has adopted end of September 2019 contingency measures applicable to financial services and social security matters in case a no-deal Brexit occurs.
Under the new rules, a UK credit institution, investment firm or fund manager authorised to provide services in Portugal under an EU passport will be allowed to continue to do so until end of 2020, provided that:
- Before Brexit, the relevant Portuguese authority (Bank of Portugal or CMVM) has received a notice from the relevant UK authority for the provision of services or the performance of an activity in Portuguese territory by such entity; and
- Within three months after Brexit, the relevant entity notifies the CMVM that it intends either to (i) unilaterally terminate the existing contracts or (ii) request authorisation to carry out its activity in Portugal.
Until the authorisation request is submitted, which must occur no later than six months after Brexit, the UK entities may not perform any new transactions with retail clients, save for the termination of existing contracts.
Banking contracts concluded before Brexit, such as deposits or other repayable funds, credit transactions, payment services and electronic money - as well as related ancillary contracts - will remain in force if the UK entities notify the Bank of Portugal within three months and comply with Portuguese laws.
UK investment funds may continue to be traded in Portugal provided that the relevant UK authority notifies the CMVM before Brexit and the fund manager provides the CMVM with the relevant information within the same deadline.
Finally, insurance contracts concluded with UK based insurance companies covering risks located in Portugal prior to Brexit will also remain in force, although they may not be extended.
In what concerns social security, UK individuals who have compulsorily paid contributions in Portugal will be entitled to claim benefits provided equivalent treatment is granted by the UK authorities to Portuguese citizens residing in the UK.
The new rules, approved by Decree-Law 147/2019, will enter into force if a no deal Brexit occurs and will expire on 31 December 2020.
Back in 2015, Spain levied a special tax on electricity producer which was suspended on the beginning of October 2018 for a six months period. Now that the suspension has ended, and as in Portugal there is no such tax, this was perceived as a competitive advantage to investors in the Iberian electricity market.
Apparently this is no longer the case as the Portuguese government has introduced a brand new special tax of €4,18 per MWh to be levied in 2019 upon all renewables not subject to a special regime. The Portuguese government argues that this fiscal disparity creates a market disturbance and should be treated as an extra-market event “which may influence the market price and revenues of the different Portuguese producers”.
The Portuguese government is in fact authorized by Decree-Law no. 104/2019 to create a payment on account in order to suppress such disparity between Portuguese and Spanish electricity producers.
This new tax was determined by the Secretary of State for Energy through the Ruling no. 8521/2019 after a proposal from the Energy Services Regulatory Entity and has entered into force on 27 September 2019.
This new tax was already foreseen in the State Budget for 2019 and its creation raises questions on its lawfulness.
The California Senate passed the new Assembly Bill 5 (“AB5”) - a controversial bill aimed at curbing the abusive use of the figure of the service provider in employment relationships.
As with the Supreme Court ruling in the Dynamex case, this new bill, published September 10th, establishes the “ABC” method, which requires the verification of three requirements for the qualification of a service provider: (i) the worker may freely carry out and organize his/her work; (ii) the execution by the employee of tasks outside the normal scope of the hiring company's activity; and (iii) usual involvement of the worker in independent businesses or occupations, with the same nature as the activity performed for the hiring company.
Should the amendments to the AB5 be approved by the California State Assembly, their entry into force will cover a wide range of professionals in many different areas: construction, security, domestic service, catering, doorkeepers and janitors – as well as Uber and Lyft drivers. It is estimated that in California there will be about one million professionals affected by this bill.
The approval of the bill will also imply that these professionals will benefit from, inter alia, health insurance, minimum wage, maternity and paternity leave, overtime pay, unemployment protection, and the possibility of unionization. This means that the lives of workers who currently have no labor protection will be radically changed.
The AB5 represents the first major political battle in the United States against the collaborative method which characterizes the gig economy – and it is an attack to the root of its business model. The new bill will deem the drivers of private transportation platforms, like “Uber” and “Lyft”, as employees.
Given the great influence of California, it is likely that other states, such as New York or Washington, where similar projects have already been presented (but which eventually had no continuity) may adopt similar measures.
Once approved by the California State Assembly, the new bill will come into force on 1 January 2020.
We will have to wait to confirm the practical results of this new bill. However, it is anticipated that not all companies will requalify their service providers as employees. In this sense, Uber is an illustrative example – the driver’s company has an history of resisting the labour regulation and the qualification of its drivers as employees.
With the wildfires afflicting again the country, and a general election in early October, the Portuguese cabinet launched two programs to combat the climatic changes and their negative effects on the environmental, social and economic domains: Program of Action and Adaptation to Climate Change (P-3AC) and Program of National Strategy of Active Cycling Mobility (ENMAC).
In the P-3AC program, the Portuguese Cabinet established as priority action lines, the prevention of rural fires, the improvement of soil quality, water management and urban vulnerabilities, reserving, to the effect, a financial package of 372 million euros to be spent up to 2020.
This package includes (i) 129 million euros to implement urgent measures, such as planting fire-resilient forest species, promoting the reduction of fuel biomass through intermunicipality structures, reconfiguration of telecommunications networks in forest areas and the installation of a communication system to alert the rural populations; and (ii) 127 million euros to make water consumption more efficient, for instance, favoring the conversion of crops to less water-demanding species, varieties and cultivars or promoting the installation of rainwater harvest system to support the industrial activity and improve the water savings.
The Portuguese Government forecasted a total spending of 560 million euros in coastal protection until 2030, to promote a more resilient coastline to erosion and coastal flooding and the removal of structures or buildings in high risk zones.
In parallel, the ENAMC program puts in place active mobility strategies in large urban areas for the 2020-2030 decade, with the intent of reducing the culture of individual transport.
Recognizing the health, traffic, economic and environmental benefits brought by cycling mobility, the program targets having 10,000 km of cycle paths until 2030 in the urban areas and creating an awareness program to universalize this mode of transport. Among the objectives of this program we can find:
- having cycling as extracurricular subject in the schools;
- building an articulated system of cycling stations;
- changing the Road Law to increase favorable and safer conditions for the users of this cycling vehicles, for example, creating more strict rules about the behavior in the cycling paths and assessing the chance of attenuation of the injured person's guilt as a cause of exclusion or reduction of compensation in the event of objective liability.
In addition, the Labour Law will be amended to improve conditions, in the medium and large companies, for workers to use bicycles, such as the right to specific space and bike lockers.
Legal 500 - Interview with António de Macedo Vitorino
Senior Partner António de Macedo Vitorino talks differentiation and success in today's market, forward-thinking strategy and the true meaning of 'adding value' to clients.
1) What do you see as the main points that differentiate Macedo Vitorino & Associados from your competitors?
Attention to the details, clarity, looking one step ahead. Generally, firms will tell you that they can deliver the best service and that they are commercially aware, but only a few can actually deliver. This is because any firm is only worth what their lawyers are capable of doing. If you have a talented team and the right business procedures, you can excel. For us, the key elements in service delivery are the attention to the quality of our processes down to the smallest points, not overstepping your role and to understand and really listen to your client. Not many firms do that. We cannot pretend that we are the best, but we like to pride ourselves in not falling short on our promise to clients: clarity, straight to the point, no legal jargon.
2) Which practices do you see growing in the next 12 months? What are the drivers behind that?
Data protection, M&A, banking and real estate. These are the areas we are seeing expanding in the market. We expect growth to continue despite the uncertainty that is felt caused by Brexit and US/China tensions. The real estate boom seems close to its end but before slowing down there will be a period of continued growth. There are several projects in the pipeline that will keep the economy and law firms busy for at least the next 12 months. On data protection and privacy, we have only scratched the surface. The use of personal data for client profiling and service and product customization will be the next big thing. Trading of data and b2b services using personal data will continue to grow. So, we see this as one of the big market opportunities for the next 12 months and beyond. Transactional services in M&A and banking are also expanding. We are now around pre-crisis levels, but we expect this to improve.
3) What's the main change you've made in the firm that will benefit clients?
Updating our internal IT systems and moving to an extremely secure cloud system. Clients don’t see it but it is changing the way we collaborate, the way we produce documents with the changes being made simultaneously by many lawyers working in the office, from home or anywhere where they have an Internet connection. We work faster and better. It’s a revolution as big as the use of email in the nineties.
4) Is technology changing the way you interact with your clients, and the services you can provide them?
Yes. We can now share workspaces with clients and bring them in on the document creation process. Sharing and working on documents in a single point of access has already changed the way we do due diligence work. We are now a long way from the days we had to go to a physical data room to look at documents and take notes. You can access virtual data rooms. That has been a big change, although people seem not give it too much credit.
Sharing actual work spaces and promoting collaborative working will more than double the speed at which you can negotiate and produce a contract, a legal opinion or a court brief.
We are now doing it internally with extraordinary results. We need to bring in the client and other stakeholders to the document production process. We will gain in the speed at which we work and also in the quality of the end product. The technology is available. We only need to start doing things in a different way. In the next ten years, collaboration tools and systems will be the norm.
In 5 to 10 years Artificial Intelligence tools will also be used on a day-to-day basis, but we are not there yet.
5) Can you give us a practical example of how you have helped a client to add value to their business?
Tough question. We like to say that if we deliver a good service, we have added value to the client’s business.
Many times, it’s in the small stuff that you add real value. Picking up the phone and answering a question can lift a weight from the client’s shoulders and that is what we are here for.
We are not stars doing miracles, but ordinary people who can do their job well.
Sometimes, doing your job well can have an outstanding result. For instance, on one occasion we were working on a financing and we were able to negotiate two comfort letters that made the difference in the pricing of the loan facility to fall to less than 20% of the initially agreed price. Because of that the entire structure of the transaction changed, new lenders were brought into the deal and the clients and the borrower were very happy with the result.
But we still say that our job is that attention to the detail and not trying to reinvent the wheel. Small things may make a big difference. We add value if the client tells us that we did our job well no matter how small or how important that particular assignment was.
6) Are clients looking for stability and strategic direction from their law firms - where do you see the firm in three years’ time?
In many instances the lawyer’s role is more that of a counsel. Clients want lawyers’ reassurance that the desired actions are suitable from a legal stand point, giving them a stable base for conducting business.
Clients also seek advice or even the validation of strategic decisions.
Counseling is at the root of a lawyer’s traditional role and it seems increasingly important as the forms of delivery of legal services become more commoditized and are taken over by legal processors and the legal arms of accounting firms.
We expect to continue the same path we have to date but also to bring more disruptive solutions to the market. We will continue investing in people, processes, technology and our clients.
Macedo Vitorino launched a new edition of its «Why Portugal» report today.
«Why Portugal 2019 - Doing Business in Portugal» contains the main information needed for anyone who wants to invest in Portugal: the creation and organization of companies, partnership contracts, labour law, tax law, intellectual property, real estate and litigation.
Together with the investor's guide we publish the «Why Portugal 2019 – How does Portugal compare?» report, which shows the situation of Portugal in comparison to other countries according to information from international sources such as the World Bank and the Economic Forum Comparative tables on the most important aspects to be taken into account by investors when choosing the best places to invest.
"We are delighted to have been able to review and update the information provided by our investor guide. These reports represent the effort of many people and demonstrates a remarkable organization capacity that shows the way we work," says António Vitorino, the partner in charge of the"?WhyPortugal?"project since it started off in 2013.
"After several years of crisis, during which it was difficult to explain the advantages of Portugal both to foreigners and to Portuguese, today it even seems easy to praise Portugal," added António Vitorino. "But we must always try to improve. The competitiveness of an economy always depends on its ability to innovate, to correct the worst and to improve the best. Competitiveness is a race: we cannot stop."
This guide reviews the main aspects to be considered by foreign investors looking at?Portugal as a place to invest,?such as how to set up of a business, government incentives, employment rules, tax system, intellectual property protection, investing in real?estate and judicial system.
Learn more at «Why Portugal 2019 - Doing Business in Portugal» and «Why Portugal 2019 – How does Portugal compare?»
MV Conversation with António de Macedo Vitorino
In the latest version of their investment Guide ‘Why Portugal’, Macedo Vitorino gives an insight into the realities and legalities of investing in Portugal, answering the key questions any potential investors need to know.
Since the 90s, Macedo Vitorino has made it a priority to impart pertinent information to potential investors in Portugal. Initially this began as a paper covering business forms, employment and tax issues, but since 2013 this has morphed into the ‘Why Portugal’ Guide. This go-to online platform for foreign investors into Portugal answers key questions and addresses fundamental issues investors need to take next steps in their decision-making process.
What started as an informative paper sowed the seeds for an idea that came into fruition in 2013, explains António Vitorino. “There were a myriad of investment guides out there, usually compiled by investment agencies and law firms, but we wanted to create something that took this to the next step, not just information on the law or stereotypical ‘attractive qualities’ of Portugal itself, but something practical and objective that investors could act on.”
Macedo Vitorino took the initiative to create something that looks at things from the investor’s point of view, tackling the actual realities of setting up or investing in Portugal, what investors can and can’t do, and their options and limitations. “For example, if you’re looking to start a business here you need to know how long it takes to create a company, how rigid the employment rules are, what your tax obligations will be and what are the practical steps to buying real estate in Portugal. These are just the basics.”
But when the «Why Portugal Guide» began in 2013, it was a time when all bets were on as to whether Portugal would remain a part of the Eurozone or even in the EU, says António Vitorino, and people said it was one of the worst places to invest in Europe. “So, it was logical for us to also touch on the actualities behind the country’s legal, political, social and economic systems as well as how Portugal compares against the rest of the EU. Investors need a full informed picture to be able to make their investment strategy.”
This comparison is a key part of the decision-making process for investors and it’s important to have this information from the start. Aside from the legalities, you need to know the type of country you are looking to invest in, he explains, especially if you are looking for the best route into the EU or you are coming in from a country outside the EU and maybe not familiar with the landscape and legal system.
“How does the judicial system actually work? How does Portugal compare to the rest of the EU for red tape and bureaucracy? These are crucial questions that need substantiated answers,” says António Vitorino. “That’s why we looked for credible international sources, such as the World Bank’ Doing Business Report, the World Economic Forum's Global Competitiveness Report and relevant EU rankings, so investors can see Portugal’s historic position from objective sources with the statistics to match.”
They also help the investor by interpreting that data into practical points that they can use to build a realistic picture of where Portugal stands. For example, in 2012 Portugal was number one in Europe for starting a business and a pioneer in the world for online incorporation of companies. “Of course, some 10 or more countries have now caught up, and now we’re not number one but still high in the rankings. But what the investor really needs to take from this is that it’s quick and easy to incorporate in Portugal,” says António Vitorino. Another example relates to resolving disputes. “We alert investors that realistically it can take up to two years to resolve a dispute in the judicial courts, which puts Portugal somewhere in the middle of the EU ranking tables, lower than the benchmark countries. While this is not ideal, it is something we’re working to improve, and investors just need to be aware to avoid any surprises.”
The key takeaway to highlight for any investor, however, is the openness of the Portuguese economy to foreign investment, with the country ranked in the top three in Europe according to a study published by the European Central Bank, which states that Portugal has “virtually” no barriers to foreign investment. “We don't have barriers to foreign investors as other countries, political or economic, and no barriers derived from nationality or any policy of protecting or favouring local companies,” says António Vitorino. “This is key, because it distinguishes Portugal from the rest of the EU in what is otherwise a pretty level playing field for investors.”
‘Why Portugal 2019’ is available in PDF and online at https://www.macedovitorino.com/why-portugal and has dedicated sections covering investment incentives, residence permits, starting a business, tax, real estate and disputes, as well as a lot more information on corporate law, additional answers to employment questions and diving deeper into questions of IP.
If you need further clarification or help with any of the issues involved, please do get in touch at https://www.macedovitorino.com/contactos/.
MVConversations with João Macedo Vitorino
Recent changes to the law and an upcoming auction hope to take Portugal from Europe’s lowest solar user to a being considerable presence in the market.
The future may be getting brighter for Portugal’s solar industry. The country’s as yet unexploited sunny climate is being put to market next month with its first ever solar auction for 1.4 GW in four key regions - Portugal’s largest ever solar energy auction. The auction comes on the back of recent reforms to the Energy Law addressing setting up the way forwards for increasing the energy grid capacity.
There has, however, been criticism and a worry that the longer-term costs are being compromise for hitting short-term goals, says João Macedo Vitorino. “While the auction system itself has been discussed at government level, it has never been discussed with the market itself. Certain issues such as the impact of reducing the return on investment in a very competitive European market, long-term costs to consumers and clarity on the actual capacity available on the grid remain unclear.”
Until recently, solar project licences were sought directly from DGEG, the Portuguese Energy Authority. Without a clear view of the actual capacity available on the grid, investors would go down the road of working on obtaining the production licence, getting environmental and geology reports, etc, but in the end there was either no capacity or the authorities simply said ‘no’, he explains. “This risk just wasn’t attractive for investors.”
Up until recently the costs of implementation were high and wouldn’t be feasible at market prices. “To sell energy at that price on the market wouldn’t get a return on an investment,” says João Macedo Vitorino, “but over the past two years, prices of solar panels has gone down, projects at market value are viable and the political will is there to get things moving with a new regime.”
From now on, to apply for a licence you first need a grid connection reservation title. This can be done in one of three ways. First, enter into a direct contract with a grid operator where there is available capacity in the grid; second, where there’s no such capacity, a direct contract with a grid operator but with the producer assuming the costs of connection to the grid; and finally through a Government auction, such as the one next month.
These positive changes to the regime have had a knock-on effect for current projects with licences or in the process obtaining them. “The Government has effectively cancelled these projects and they need to resubmit to the auction,” explains João Macedo Vitorino, “which means running the risk of refusal, so we are likely to see some court cases cropping up in the future”.
While next months’ auction has the potential to increase the number of projects to be connected to the grid, one concern is that successful bids are to be awarded on the basis of the lowest tariffs. While an aggressive fixed tariff (starting at 20% below the market price as of today) means short-term savings for consumers, should energy prices go down the fixed tariffs granted in the auction will remain the same, adding a substantial advantage for the producers but imposing high invoices for the consumer.
Comparison can be drawn with what happened with the Portugal’s small hydroelectric projects auction for capacity back in 2010. Bidders made offers for tariffs that couldn’t sustain the investments that the projects needed, projects didn’t go ahead, and no further auctions took place, he explains. “To hit the new 5GW to 6GW solar targets set by the Government, we would need at least 3 or 4 auctions to take place, which may not be feasible if conditions remain as they are as they may not be enough to attract investors.”
An alternative to this auction system would be a free market approach where all stakeholders have clarity on the grid capacity available today and in the near future. This would mean they could plan in advance where to invest, with a grid connection being granted on a simple principle of first-come first-served. While there are numerous viable locations for solar projects, such as in the Alentejo region, many do not have grid capacity access in their vicinity. To cover the distance needed to put these locations on the grid requires substantial investment, driving up the costs of the project itself, adds João Macedo Vitorino. “This is something that could deter investors when coupled with auction conditions designed to reduce project profitability. Although encouraging costs sharing between grid operators and developers could be one way to bridge this gap, as laid out in the revised Energy Law, investors will not be attracted to auctions in areas of low grid density.”
Ultimately, while elements of the new legislation and auction system do address difficulties brought up by market players, the overall solution and architecture has never been validated by those same market players. “While the potential is there to put Portugal on the solar map, the Government is trying to force the market players to share profit margins with consumers, which will most likely result in delaying the deployment of solar energy output in Portugal,” explains João Macedo Vitorino. Unless these conditions change for future auctions, we run the risk of history repeating itself and either failing to get the investors needed to increase grid capacity or see consumers bearing the costs in the long-term.
For anyone interested, the tender documents and maps of grid availability can be accessed online at https://leiloes-renovaveis.gov.pt/ and bidders registration is open until 7th July.