With around 3,000 hours of sunshine per year, Portugal stands as the European country with the highest average hours of sun exposure, and it has harnessed this advantage to emerge as one of the most progressive and enthusiastic nations in the promotion of renewable energy.

Portugal’s domestic primary energy production relies predominantly on renewable energy sources, thereby diminishing the country’s dependence on imported fossil, consequently reducing the emission of greenhouse gases. In 2022, 56,9% of the electricity generated was based on renewable sources, and this is expected to rise steeply in the coming decade. 

In its most recent version, released on 30 June 2023, the Portuguese National Plan for Energy and Climate for the period 2023-2030 (“PNEC 2030”), sets ambitious goals for a substantial rise in renewable energy generation, notably by committing to 85% of electricity production based on renewable sources by the end of 2030.

Regarding solar energy, it is expected by the end of 2030 an increase in solar capacity by 20.4 GW with (a) centralized solar production to reach 14.9 GW, and (b) decentralized solar production to reach 5.5. GW.  

These figures come close to quadrupling the current installed capacity with centralized solar production currently standing at 1.5 GW and decentralized production at 1.1 GW. These numbers appear even more impressive when compared at a scale of 1 to 5 to the Spanish PNIEC, which aims for a total solar energy production capacity of 76 GW.

The ground rules and current organization of the Portuguese National Electrical System are established in Decree-Law No. 15/2022, of 14 January (“Energy Law”), setting forth the legal framework applicable to the activities of generation, storage, transmission, distribution and supply of electricity.  

Overall, the road to market of a 1MW+ renewable energy generation must go through the following steps: (i) a grid capacity, (ii) environmental clearance, (iii) a production license, (iv) the approval of the Municipality for construction of the power plant, (v) securing connection to the public grid, (vi) execution of compensation protocol with the Municipality, and (vi) an operation license.

The guide provides a snapshot of the main steps to fully license a solar power plant with 1MW+ of installed capacity.  

GRID CAPACITITY TITLE 

The first step of the proceeding starts with the award of a reservation of injection capacity title in the RESP (“Capacity Title”). There are three ways that promoters may apply to obtain the Capacity Title: (i) General Access, (ii) Agreement with the grid operator, or (iii) Competitive Auction  

In the General Access, promoters request directly the Capacity Title to the Portuguese Directorate of Energy (“DGEG”), subject on DGEG’s publication of the available capacity in the grid, by providing the output capacity and the connection substation and voltage level.  

Within 5 days upon reception of the request, DGEG notifies the grid operator to inform on the available capacity within a period of 45 days and DGEG issues the Capacity Title when there is grid capacity on a first-come first-served basis. The request may only be refused on grounds that there is no available capacity in the specific substation or if the request exceeds the available capacity. 

The capacity available in this modality should have been published by DGEG by July 15, 2022, but, up to this date, it has not yet occurred, meaning that this method of obtaining the Capacity Title is currently not feasible.

The second method consists in an agreement between the relevant grid operator and the promoter to extend the grid capacity, on which the promoter finances the expansion of the grid capacity. 

The Secretary of State for Energy shall establish the capacity to be allocated in the RESP in this modality until January 15 of each year and the the promoters must apply until March 15th, of each year.

The grid operators release a ranked list of the projects (based on technical and safety criteria) by August 10th, of the same year and within 10 days after the release of the final list, the grid operators send to the promoters the budget for carrying out the grid reinforcement studies and the relevant payment deadline.

Until April 30 of the following year, the grid operators send to the promoters (i) the grid studies, (ii) the costs of reinforcement of the grid and (iii) availability deadline for completion of the works, and (iv) draft of the agreement to be entered with the promoter.  

The promoter has 30 days to accept the execution of the agreement. If accepted, the agreement must be executed by the end of November, or the request will expire. 

GRID CAPACICITY TITLE (II)

This modality is also currently unavailable due to a procedure launched by the Government in 2020 called “Termos de Referência”, which established a set of criteria for ordering prior submitted requests. DGEG published the final rankings of eligible projects for agreements with the TSO (78 projects) and DSO (53) on 2021, subsequently amending the list in July 2023 to give priority to projects that already conducted an environmental assessment.

The first tranche of projects with a total capacity of 3,6 GW is currently being handled by the TSO (3,2 GW) and the DSO (350 MW), and as far as is publicly known, the draft of the grid reinforcement agreements has been sent to the promoters.

The Government has already confirmed that the second tranche will enclose a capacity of 5 GW for projects on the TSO list (up to the 23rd position) and 1 GW for projects on the DSO list (covering all eligible projects).

A third tranche of projects with the remaining capacity is expected to start being handled by the TSO in 2024.

The grid connection reinforcements necessary for connecting the projects to the RESP are expected to be concluded in 2028, 2029 and 2030.

The allocation of injection capacity in the RESP may also be subject to a tendering procedure.

The modality of the procedure, the conditions and criteria for the allocation of reserve of injection capacity in the RESP, the remuneration scheme, the access, the duration and conditions, the deadlines for the commencement of operation and respective extensions are set in the tender documents. 

The decision to launch a tendering procedure results in the immediate cancelation of the pending applications for allocation of capacity for injection points to be included in the procedure, unless the promoter has already paid for the grid studies.

The application for obtaining a Capacity Title is subject to the delivery of deposit by the promoter, as follows:

• In the General Access: EUR 10,000.00 per MVA of injection capacity;
• In the agreement with the grid operator: EUR 15,000.00 per MVA of injection capacity;

ENVIROMENTAL ASSESSEMENT

Before applying for the production license, a project may have to obtain: (i) a favourable or conditionally favourable Environmental Impact Statement (Declaração de Impacte Ambiental – “DIA”), when the project is covered by the Environmental Impact Assessment (Avaliação de Impacte Ambiental - “AIA”), or (ii) a favourable or conditionally favourable Environmental Repercussions Assessment (Declaração de Incidências Ambientais – “DINCA”), when the project is to be established in areas of National Ecological Reserve, Natura 2000 areas or National Protected Areas Network.

DIA is a decision about the environmental feasibility of a project after an environmental impact study is conducted by the promoter. Any project (i) with a generating capacity ≥50 MW or the area occupied by panels and inverters is ≥100ha, (ii) or, in case it is installed in sensitive areas, has a generating capacity ≥20 MW or the area occupied by panels and inverters is ≥10ha is subject to AIA. Furthermore, the projects that do not reach those thresholds are subject to a case-by-case assessment of their potential impact on the environment, based on their location, size or nature, and may be subject to AIA by decision of the Portuguese Environmental Agency (Agência Portuguesa do Ambiente – “APA”) or of the DGEG

Promoters shall submit the environmental study to APA that will issue the DIA after a period of public consultation of 30 days. A non-favourable DIA decision terminates the relevant AIA procedure.

The project will be subject to DINCA in case it is located in a sensitive area being carried out by the Commission for the Coordination of Regional Development (Comissão de Coordenação e Desenvolvimento Regional – “CCDR”) based on an environmental repercussions study submitted by the promoter. The DINCA is a simplified process, with the same purpose of AIA but with lighter requirements.

When a a project is not subject to AIA or AINCA, the only environmental requirement that shall be stressed out is a favourable opinion of the competent CCDR regarding the location of the project to be requested within the context of the Municipal Licensing, without prejudice to other entities that may be required to issue an opinion within such licensing procedure.

In case the lands where the project is to be installed fall within the National Ecological Reserve or are in areas crossed by water lines, the regulations regarding these two constraints should be taken into consideration.

PRODUCTION LICENSE

Renewable power plants with an installed capacity over 1MW must obtain a production license to start the development and operation of the project. The procedure starts with the promoter submitting a request to DGEG for the award of the production license within a 1-year period from the award of the Capacity Title, if the project is subject to AIA, otherwise this deadline is reduced to 6-months.

Upon request of the promoter, the deadlines established in the previous paragraph may be extended – one time - for a maximum of 1-year period upon issuance of a DGEG’s order. This second deadline can be extended for an indefinite period of time by order of the member of the Government responsible for the energy sector, upon request duly grounded by the promoter.

The application to obtain a production license must be accompanied with a set of documents, including: (i) Capacity Title, (ii) land right, (iii) project description and technical documentation in connection with the power plant facility, and (iv) favourable environmental opinions, if applicable.

DGEG shall start the consultation with external entities (particularly grid operator) regarding the installation of the project. Within a period of 30 days after the deadline of 20 days for the external entities to issue their opinion, DGEG shall decide upon the award of the production license.

The award of the production license is subject to the provision of a deposit to DGEG, in the amount of EUR 10,000 per MVA of injection capacity, with a maximum limit of  EUR 10,000,000.00 for a period of 30 months or until the entry into operation of the power plant (whichever occurs later), under penalty of expiry of the procedure.

The production license grants to the promoter, amongst other, the right to (i) install the power plant, (ii) sell the generated energy in organized markets or bilateral agreements, or to the last resort supplier in case the project benefits from a guaranteed remuneration scheme.

The production license may be assigned, but subject to the previous consent of DGEG, and may only be approved if the legal requirements for its award are met by the assignee and (i) if the share of electricity generation capacity held by the assignee in MIBEL on December 31 of the previous year does not exceed 40%, and (b) if the assignee display technical and financial economic capacity and experience to ensure completion of the project). 

CONNECTION TO THE GRID

The promoter bears the costs of the construction of the necessary infrastructures for connecting the renewable energy project to RESP, including the costs related to the occupation of the land which is necessary for the installation of said infrastructures. As a rule, renewable energy project with an installed capacity of more than 50 MVA are connected to the transmission grid, while plants with less than 50 MVA are connected to the distribution grid.

The grid connection offer is valid for a period of 180 days on which the promoter must accept them or request its modification in case it does not agree with the conditions submitted. Otherwise, such connection conditions expires, and new technical conditions must be requested. Once the promoter has accepted the grid connection offer, the promoter may start the procedure to construct the necessary connection infrastructures.

The costs and charges for the licensing process and construction of the connection facilities that will connect the relevant renewable energy project to the grid are the responsibility of the promoter and, as general rule, subject to technical validation of the project by relevant grid operator since after their construction the connection facilities shall be included into the concession of the grid operator.

Pursuant to the Electrical Installation License Regulation approved by Decree-Law 26852, of July 30, 1936, as a rule electrical facilities that connect renewable energy projects to the grid are subject to obtain an establishment license to be awarded by DGEG. The issuing of the establishment license is not mandatory before starting the construction of the power plant, although it is mandatory for the construction of the connection facilities that will connect the power plant to the public grid.

The request of the establishment license shall be performed by the grid operator after conduction a technical validation of the connection project submitted by the promoter. The promoter is also responsible for securing the necessary land rights and/or easements for the construction and operation of the connection facilities and for compensation due to affected landowners.

The promoter shall assign the connection facilities to the relevant grid operator after its construction as it shall remain under the concession of the latter. Upon the assignment, the promoter shall provide a guarantee to secure any construction or manufacturing defects corresponding to a maximum of 10% of the value of the relevant facilities, valid for a period of 2 years for the electrical works and 5 years for the civil works.

MUNICIPAL CONTROL 

According to legal framework concerning urban planning and building, construction enacted by Decree-law no. 555/99, of December 16, building a power plant is considered an “urbanistic operation”, and thus subject to:

• A licensing procedure through the obtainment of a construction license and construction permit, being the permit a condition for the construction license to be effective and for the start of the works
• The approval to a prior communication request which, if properly instructed and approved by the Municipality grants the right to immediately start the construction works.

Before construction, it is possible to ask the municipality, on a preliminary basis, information about the feasibility of certain urban planning operation, including legal and regulatory constraints. A favourable preliminary information binds the competent entities on the decision to make on a potential construction request for a period of 1 (one) year.

To obtain the construction license, the promoter submits online (on the municipalities’ website) a request addressed to the President of the Municipality. The President of the Municipality decides on the completeness of the request and starts a period of consulting external authorities.  Within 45 days from the date of receipt of the last of the opinions, or approvals by such authorities, the Municipality decides upon the issuing of the construction license. 

In any case, the construction works may only commence after the issue of the relevant construction permit, which must be applied by the promotor within one year of the date of the issuing of the construction license. Failing to comply with the said deadline will cause the expiration of the construction license. 

The prior communication request consists of a declaration that, provided it is properly instructed, allows the interested party to proceed immediately with certain urban planning operations after payment of the fees due, dispensing with the practice of any permissive acts.

Based on reasonable grounds, the construction deadline may be extended for a further period not exceeding half of its initial term. 

After completion of the construction works, the license of use for the project shall be obtained attesting that the works are completed and have been executed in accordance with the relevant construction procedure, as well as with applicable law and regulations.

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