1. FOREWORD

After considerable delay, Law 16/2022, of 16 August 2022 (the "Electronic Communications Law" or "ECL") implemented the European Electronic Communications Code (the "European Code" or "EECC").

Despite the absence of changes in critical elements, the ECL brings in some crucial innovations regarding (i) consumer rights, (ii) sanctioning framework, and (iii) privacy in electronic communications.

Compared with the previous electronic communications law (Law 5/2004, of 10 February), the ECL has a wider scope reflecting a more comprehensive definition of "electronic communications service". According to the new definition, electronic communication services now include (i) internet access services; (ii) interpersonal communications services, including number-independent services such as most over-the-top ("OTT") communications applications; and (iii) services consisting wholly or mainly in the conveyance of signals, including services used for machine-to-machine communications.

The rules entered into force 90 days after the ECL's enactment, on 14 November 2022, with the following exceptions:

• rules on the charges required upon early termination of the agreement at the consumer's request (articles 136(4) and 136(5) of the ECL) became effective 60 days after publication, on 13 January 2023;
• rules on emergency communications and the single European emergency number, which take effect from the moment access to an emergency service is opened to the public by the competent national authorities; and
• rules on network and service security — including additional requirements and arrangements for assistance and cooperation with the National Computer Security Incident Response Team (Equipa de Resposta a Incidentes de Segurança Informática Nacional) — which came into force immediately upon publication of the ECL.

It is worth noting that, in 2004, the Portuguese legislator had already unified five EU Directives[1] into a single piece of legislation, creating a structurally cohesive framework that was broadly maintained until 2022. Even so, by mid-2021 the Portuguese communications regulatory framework comprised, in addition to the 2004 Electronic Communications Law, 46 other diplomas[2].

Despite major changes, particularly to consumer protection and the sanctioning framework, the ECL retains the same structure as its predecessor, with notable implications for operators' financial and business stability.

2. ANACOM AND OTHER AUTHORITIES

The Portuguese Communications Authority (Autoridade Nacional de Comunicações, "ANACOM") is Portugal's National Regulatory Authority (Autoridade Reguladora Nacional, "NRA") for the communications sector.

The term "communications" – which defines ANACOM's scope of authority – includes electronic and postal communications. The ECL clarified ANACOM's jurisdiction in previously undefined areas and expanded its role to include new market sectors.

For instance, the ECL extends ANACOM's regulatory authority to over-the-top ("OTT"[3]) services. Although these services operate exclusively at the application layer of data transmission networks[4], the ECL categorises OTT as an interpersonal communications service for legal and market-analysis purposes, particularly as regards end-user rights.

The ECL assigns ANACOM a comprehensive set of regulatory, supervisory and enforcement duties for the communications sector. Specifically, ANACOM is responsible for:

• promoting competition in the provision of electronic communications networks and services;
• ensuring access to networks, infrastructures, facilities, and services;
• protecting the rights and interests of consumers and other end-users; and
• ensuring access to the universal electronic and postal communications service and enforcing universal service obligations.

Among other changes, the ECL grants ANACOM additional powers and duties, particularly in spectrum management. ANACOM is now empowered to promote the shared use of the radio spectrum, allowing multiple operators to access the same frequency bands through the allocation of rights of use for frequencies (Direitos de Utilização de Frequências"DUF").

Additionally, the ECL clarifies that the rules for competitive or comparative selection procedures for radio spectrum rights of use must be approved by the government department responsible for the communications sector.

The ECL aligns with the European Electronic Communications Code by recognising the role of "other competent authorities" in the communications sector. Entities such as the National Authority for Emergency and Civil Protection (Autoridade Nacional de Emergência e Proteção Civil, "ANEPC") are granted specific statutory powers, particularly as regards end-user rights.

To this end, the ECL requires ANACOM to collaborate with "other relevant entities" by organising public consultations and sharing information on matters of joint interest, in particular those relating to emergency communications.

3. General authorisation, frequencies and numbers

3.1. General Authorisation

The provision of electronic communications networks and services is unrestricted: companies may offer such services without prior authorisation from the regulator, except where they seek rights of use for resources such as frequency bands or numbering.

Companies intending to provide public electronic communications networks and publicly available electronic communications services must notify ANACOM before commencing operations. The notification must include:

• a statement of the applicant's intent to begin operations;
• the applicant's identification details, along with the website associated with the provision of public electronic communication networks and services;
• contact information for communications and notices, including a mandatory email address;
• a brief overview of the planned network and services; and
• the expected service launch date.

Companies not subject to the general authorisation regime under the ECL are not required to notify ANACOM before launching operations. The requirement likewise does not apply to providers of electronic communications services not intended for public access.

ANACOM may also, by specific regulation, exempt certain providers of public electronic communications networks and publicly available services from this requirement.

3.2. General and Specific Conditions

Companies providing electronic communications networks and services remain subject to several general conditions established under the previous law. These include:

• access obligations;
• obligations related to the processing of personal data and the protection of privacy within the electronic communications sector;
• obligations to install and make available lawful interception systems to national authorities, including decryption capabilities where such facilities are offered;
• conditions of use of the radio spectrum for electronic communications services; and
• conditions of use to ensure communications between emergency services, competent authorities, civil protection agents and the public.

Entities not subject to the general authorisation regime are not subject to these general conditions.

In addition, companies providing electronic communications networks and services may also be subject to specific obligations, particularly those related to access and interconnection, retail market regulations, and the provision of universal service.

Finally, providers of number-independent interpersonal communications services may, in certain cases, also be subject to access and interconnection obligations as a result of changes introduced by the ECL.

3.3. Operator's Rights

The ECL grants companies providing electronic communications networks or services — whether intended for public or private use — the right to request rights of way and to use the radio frequency spectrum in order to deploy their networks and services.

Companies offering public networks or services have additional rights, including the right to apply for universal service provider status and expand their coverage nationwide.

These rights may be amended by legislative, regulatory or administrative measures, provided such changes are objectively justified and proportionate, and are notified to the rights holder. Amendments are subject to a public consultation process allowing stakeholders to provide input, unless the changes are minor or do not affect the fundamental nature of the rights of use.

The holders of DUF and numbering resources are granted a general guarantee of non-restriction and irrevocability of these rights until their expiration. However, the law outlines specific criteria under which these rights may be restricted or revoked in advance by the NRA, including:

• voluntary consent by the rights holder; and
• justified reasons to ensure the effective and efficient use of numbering resources or radio spectrum; and the implementation of technical measures under Article 4 of the Radio Spectrum Decision.[5]

Restricting or revoking rights without the holder's consent or in unjustified cases must follow a legal procedure that upholds the principles of proportionality and non-discrimination.

Where rights are restricted or revoked, holders are entitled to compensation for any exceptional and abnormal losses or damages suffered, as determined by ANACOM in accordance with the rules on non-contractual liability of the State and other public entities.

In summary, the ECL introduces no significant innovations in this area, but clarifies that these rules extend to OTT services and to companies wishing to offer electronic communications services not intended for public use.

3.4. The Radio Spectrum

The radio frequency spectrum, which enables the transmission of electromagnetic waves with frequencies between 3kHz and 3000GHz, is a vital public resource with significant economic and social value for the country. This importance is evident in the amounts paid for rights to use it and in the intense public debate surrounding spectrum-related issues[6].

ANACOM is responsible for managing the spectrum and must promote its efficient use in accordance with the principles of technology and service neutrality. The first principle means that any technology may be used in the frequency bands allocated to electronic communications services; service neutrality, in turn, means that any type of electronic communications service may be offered using those frequency bands.

The ECL has not introduced significant changes to ANACOM's role. ANACOM retains most of its existing powers, including the power to assign, modify, renew rights of use, and to authorise the transfer or lease of such rights.

However, in response to the difficulties encountered during the 5G DUF auction, the ECL introduces two seemingly conflicting changes regarding future frequency allocation procedures. On one hand, ANACOM has been granted new powers to safeguard competitive use of frequencies; on the other, the authority to decide on frequency allocation procedures has been transferred to the Government, which must now approve them directly.

The ECL reiterates ANACOM's responsibility for granting rights of use of frequencies for electronic communications networks or services. These rights are always time-limited. For example, rights of use for the spectrum of wireless broadband electronic communications services are granted for 15 years, with the possibility of renewal.

As under the previous regime, ANACOM is also responsible for defining the conditions associated with the rights of use of the spectrum. If breached, the regulator can revoke the rights of use or impose other measures. These conditions must be proportional, transparent, and non-discriminatory, including setting maximum periods of rights of use.

The ECL introduces an innovative provision for the shared use of the radio spectrum, expanding its potential applications.

The renewal of rights of use is possible, but the renewal rules have been significantly changed under the ECL:

• under the previous law, the renewal of rights of use for the radio frequency spectrum was solely dependent on the initiative of the holder; and
• under the ECL, ANACOM may proactively assess the need to renew the radio frequency spectrum.

Holders of rights of use for the radio frequency spectrum may also apply for renewal; however, applications must be submitted between 18 months and five years before the rights expire, compared with a minimum of one year's notice under the previous law. In any case, the regulator must respond to renewal requests within six consecutive months from the receipt date.

In the case of rights of use whose number has been limited, interested parties must be given the opportunity to provide input on their renewal, through a public consultation process. In this regard, in September 2024, ANACOM launched a public consultation on the availability of spectrum resources for terrestrial electronic communications services ("SCET"), addressed to manufacturers, operators, public and private entities, users and others, in addition to those currently allocated to the six operators that participated in the 5G Auction. The consultation was concluded in November 2024 and the respective report was approved on 20 February 2025, in which ANACOM signalled that it may be justified to make available in the near future the remaining 700 MHz band spectrum from the 5G Auction, with any further release of additional bands to be carried out on a phased basis.

As rights of use are licensed to operators, holders are required to pay periodic fees, which (save in exceptional cases) are intended primarily to cover the costs of radio supervision.

Finally, it is worth mentioning that the National Frequency Allocation Framework (Quadro Nacional de Atribuição de Frequências - "QNAF", which may be accessed through this link) serves as the technical management instrument used for the radio spectrum, which defines the conditions of use according to its purpose.

3.4.1. Transfer and Lease of Rights of Use

The ECL allows the transfer or leasing of rights of use for the radio spectrum.

As a rule, if the rights holder wishes to transfer or lease them, it can do so through a request to the regulator, which must approve or deny it within 45 business days.

However, in some cases, the transfer or leasing of rights of use is not permitted. These cases include rights allocated free of charge, the provision of radio broadcasting services and the distribution of television and radio broadcasting services as part of specific procedures to achieve public interest objectives.

3.4.2. Competition

Under the ECL, ANACOM is required to promote effective competition within the European Union's internal market when allocating, modifying or renewing frequency usage rights, and to minimise potential distortions of competition. To that end, ANACOM may itself adopt, or recommend to other competent authorities, measures to address such distortions. These measures may include, among others:

• limiting the number of spectrum bands for which usage rights are granted or imposing conditions on these rights;
• reserving portions of a spectrum band or group of bands for allocation to new market entrants; and
• denying new rights of use or prohibiting new spectrum uses in specific bands and imposing conditions to their allocation, transfer, or lease to prevent competitive imbalances.

When adopting such measures, the regulator must base its decisions on an objective and forward-looking assessment of competitive conditions in the market and the necessity of the proposed action.

3.5. Numbering Resources

The ECL designates ANACOM as the entity responsible for managing numbering resources in Portugal.

 "Numbering resources", defined as the structured set of codes used by electronic communication networks to route signals, are part of the National Numbering Plan (Plano Nacional de Numeração – "PNN", accessible through this link), or an international numbering plan[7]. ANACOM has the power to administer and allocate these numbers, which can be used to identify networks, network elements, end-users, services or applications that utilise these services and networks.

The ECL states that ANACOM is tasked with ensuring the availability of numbering resources for the operation of public electronic communication networks and the provision of publicly accessible electronic communication services.

Operators must submit a detailed and reasoned request to ANACOM to obtain the right to use these resources. ANACOM uses the National Numbering Plan as the technical tool for managing the allocation of numbers, which sets specific criteria for each numbering range.

Furthermore, Regulation No. 1028/2021, of 29 December, established the legal framework for the sub-allocation of E.164 numbers from the PNN, allowing holders of rights of use of numbering resources to assign them to third parties (beneficiaries). This regime contributes to reducing barriers to entry for new operators in the market, by enabling access to numbering resources without the need for a direct allocation from ANACOM, thereby promoting competition and innovation in the electronic communications sector.

3.6. Security and Emergency

The ECL establishes general responsibilities for coordinating electronic communications networks and services during crises, wars, major accidents or disasters, and threats to internal security, and singles out two specific rules:

• first, providers of communication services using numbers are required to issue free public warnings in the event of imminent or ongoing emergencies, accidents, or disasters; and
• second, all end-users of communication services are entitled to free access to the European emergency number 112, as well as any other national emergency numbers designated by ANACOM and listed in the National Numbering Plan, for making emergency calls.

4. Market overview

4.1. General Provisions

Under the ECL, market analysis and the imposition of specific obligations must comply with the principle of full justification: all decisions must rest on legal requirements and must be preceded by a public consultation.

Defining the relevant product and geographic markets in the telecommunications sector and determining which companies have significant market power are ANACOM's responsibility.

4.2. Market Analysis

The ECL entrusts ANACOM with the task of defining and analysing the relevant product and service markets within the electronic communications sector, taking into account the level of infrastructure-based competition in each.

Following this analysis, ANACOM may impose specific obligations when:

• market entry barriers exist;
• the market structure does not support effective competition; and
• competition law alone is insufficient to address specific deficiencies.

The analysis may be conducted for national and transnational electronic communications markets, in cooperation with European authorities.

4.3. Obligations on Operators with Significant Market Power

The ECL retains the traditional definition of significant market power as a strong economic position that enables a company to operate independently of competitors, customers and end-users.

Like the previous legislation, the ECL allows the regulator to impose certain obligations on companies with significant market power. These obligations may include:

• meeting reasonable requests for access to and use of infrastructure, such as civil engineering assets owned by the company;
• implementing cost-oriented pricing and cost-accounting systems for specific types of interconnection and access where there is no effective competition. The ECL introduces stricter conditions for imposing these obligations: ANACOM must now take into account the benefits of predictable, stable wholesale prices that encourage efficient market entry and incentivise investment in new and more advanced networks, particularly in areas of low population density; and
• the ECL aligns with the European Electronic Communications Code by recognising the positive impact that wholesale competition can have on retail markets and on the mitigation of competitive risks.

Accordingly, wholesale-only operators are subject to a more favourable regulatory regime. Their obligations may be limited to non-discrimination, access to specific network elements and associated facilities, or fair, reasonable and non-discriminatory pricing. This regime applies only where the operator meets strict cumulative criteria, which may make qualification challenging for some.

Companies with significant market power are now subject to specific obligations on infrastructure migration. To mitigate the competitive risks associated with the transition from legacy copper networks to next-generation networks, such companies must give prior notice of any plan to decommission or replace their infrastructure, in whole or in part.

Access obligations are not limited to companies with significant market power. To improve economic efficiency, the regulator can impose access requirements on operators or owners of cabling and associated facilities within buildings or up to the first distribution point outside the building, regardless of market power status. This measure relies on symmetric regulation that applies uniformly to all operators[8].

4.4. Access and Interconnection

4.4.1. Interconnection

Companies providing electronic communications networks and services are free to negotiate and conclude interconnection agreements independently.

ANACOM may impose access and interconnection obligations on companies, regardless of whether they hold significant market power, provided such obligations are objective, proportionate, transparent and non-discriminatory. For instance, ANACOM may impose additional obligations on undertakings that control access to end-users.

4.4.2. Regulatory Obligations

The ECL aligns closely with the EECC, preserving the regulatory obligations established under the previous legislation while introducing new obligations that are both more stringent and more complex.

One example is the ECL's emphasis on symmetric regulatory and access obligations — such as providing access to in-building cabling up to the first concentration point, granting access to civil engineering assets and imposing national roaming obligations. These provisions aim to strengthen regulatory oversight and promote fair competition; however, their stringency adds complexity that may hinder implementation.

While these new rules are intended to strengthen user protections, they raise practical implementation concerns.

4.4.3. National Roaming Obligations

Following the EECC, the ECL introduces the concept of national roaming. It is viewed as a significant regulatory mechanism for overcoming physical and economic barriers to the provision of services and networks that require radio spectrum rights of use, particularly for mobile network operators serving end-users.

Where access to and sharing of passive infrastructure is insufficient to ensure adequate coverage, the regulator may impose active infrastructure sharing or require national roaming agreements. Such obligations may, however, be imposed only under specific conditions — for example, where unavoidable physical or economic constraints (such as limited access in protected areas due to building restrictions) result in inadequate or non-existent service availability for end-users.

This mechanism is justified only where passive infrastructure sharing and access prove insufficient.

4.4.4. International Roaming

International roaming, introduced with early 2G mobile networks, allows customers of one provider to access mobile services through the networks of other operators while abroad. The service enables users to make and receive voice calls, send and receive text and multimedia messages, and access the internet while travelling, and has been one of the principal drivers of the widespread adoption of mobile services, particularly over GSM networks.

Roaming charges have traditionally been higher than domestic charges, as third-party operators set fees for visiting users. Regulatory pressure in the European Economic Area (EEA) has led to a significant reduction in those charges and, since the introduction of the EU's "Roam Like at Home" initiative in 2017, users within the EEA pay the same rates for international roaming as they do on their home network. Charges outside the EEA remain higher than domestic ones.

It is important to note that international roaming is not regulated by the ECL but by European regulations, specifically by Regulation (EU) 2022/612 of the European Parliament and the Council of 6 April 2022.

4.5. Regulatory Controls in Retail Markets

ANACOM's power to impose specific obligations on retail markets is subject to two cumulative conditions:

• the absence of effective competition; and
• the imposition of obligations on wholesale operators would not be sufficient to achieve the regulatory objectives.

The ECL aims to prevent operators from engaging in excessive pricing or discriminatory practices against end-users.

5. Users' rights, universal and mandatory services

5.1. End-users' Rights

Companies offering networks or services, including OTT providers, are now fully subject to the end-user rights set out in the ECL.

As an exception applies to the micro-entities[9] offering number-independent one-to-one communications services: although exempt from these rules, they remain required to inform end-users of the exemption.

Under the ECL, end-user rights extend to consumers, micro-entities, small enterprises and non-profit organisations that have not waived such rights.

Under the ECL, organisations are entitled to:

• receive written information about service terms and conditions;
• be notified at least 15 days in advance of the operator's intention to discontinue a specific service;
• access information on expected and actual service levels;
• receive itemised invoices, including an itemised cost breakdown and information on the end of the minimum contractual period;
• benefit from increased protections in cases of unauthorised contracts;
• have access to tools for viewing pricing and other contractual conditions;
• receive immediate and proportional reductions in monthly fees for service quality failures, in addition to any other applicable compensation;
• maintain continuous access to the contracted services and receive notice of service suspension; and
• exercise the right to number portability.

End-user protection has become a cornerstone of the ECL. Even so, the legislator's attempt to empower users has produced unintended consequences, including gaps in guidance that create an unwelcome sense of uncertainty. For example, the ECL prohibits operators from unjustifiably discriminating against customers based on nationality or place of residence, but offers no guidance on what may be considered justifiable discrimination — a sensitive matter likely to give rise to disputes.

The ECL seeks to empower end-users by ensuring fair treatment within the market. The protection of end-users is a fundamental aspect of the ECL. As part of this framework, the non-discrimination rules ensure that consumers have equal access to services and that companies cannot discriminate against users based on their nationality or residence. ANACOM has also approved a new Number Portability Regulation, which replaces the framework previously in force since 2005. The regulation was published in January 2025 and entered into force on 10 November 2025. The essential structure of the previous regime is preserved, but several important changes were introduced, including enhanced consumer-protection measures, such as:

• prohibiting certain portability fees for end users; and
• requiring providers to ensure both the portability of numbers and their activation.

5.2. Agreement Information Requirements

The ECL complements the framework for the disclosure of pre-contractual information. Under the ECL, public communication providers and operators, excluding machine-to-machine service providers, are now required to provide consumers with essential information (under the Consumer Protection Act) about key aspects of the agreement before signing the contract. Among other things, operators are required to disclose information on:

• the main characteristics of the goods or services;
• the provider's identity, including company name, postal address, telephone number and other contact details;
• the full price of the services, including the fixed fees, applicable taxes, additional setup charges, and other relevant costs, including maintenance fees; and
• the price calculation method in cases where, due to the nature of the service, the price cannot be determined before the agreement.

The ECL also requires operators to adopt and make available a summary of the user contract terms and conditions.

5.3. Control Mechanisms for Contracting and Invoicing

According to the ECL, billing for publicly available electronic communications services must be conducted monthly. Invoices must be sent to the end-user free of charge and must include:

• a breakdown of the services provided along with the corresponding prices;
• the remaining term of the minimum contractual obligations; and, where applicable,
• details of the social tariff for broadband internet access services and its application to consumers on low incomes or with special social needs.

5.4. Duration of the Agreement

Due to the prevalence of bundled services (triple, quadruple and quintuple play offerings with implied discounts[10]), particularly in the residential fixed-line market, local operators tend to waive setup fees in favour of minimum contract periods which, if breached, trigger steep early-termination fees. Unsurprisingly, minimum contract periods[11], have become one of the most debated issues in consumer law.

Even so, the ECL maintains its position on minimum contract periods and early-termination charges, opting for more targeted changes — in particular, introducing the concepts of initial and follow-up minimum contract periods and setting caps for both.

Consequently, operators providing publicly available electronic communications services must offer a version of those services without any customer lock-in period, and any minimum contract period is capped at 24 months.

In addition, a consumer's subscription to supplementary services or terminal equipment cannot be used to extend the initial lock-in period unless the consumer expressly agrees to the extension at the time of subscription.

5.5. Termination of the Agreement

On contract termination, the ECL departs significantly from general legal principles, particularly as regards default and liability, in order to strengthen consumer protection.

Under the ECL, services to defaulting non-consumer end-users may be suspended subject to prior notice, save that access to emergency services may not be discontinued.

For defaulting consumer end-users, the operator must issue a notice opening a grace period of at least 30 days. A further 30-day suspension period is then permitted, after which the contract terminates automatically, without further notice, once the applicable notification requirements have been met.

Where services are unavailable for more than 24 hours, the ECL requires a proportional reduction in the bill regardless of whether the consumer requests one. If service remains unavailable for more than 15 days, the end-user may terminate the agreement at no cost.

The ECL also sets out additional specific grounds for terminating the agreement, beyond those already mentioned.

For example, in the event of a "significant discrepancy between the actual performance of the service and the performance described in the agreement", the end-user may demand corrective measures — although the ECL does not specify which measures may be required — and may terminate the agreement without penalty. The use of such arguably vague concepts is likely to generate disputes and, in time, case law to delimit their application.

As noted above, the ECL has introduced specific changes to the admissibility of minimum contract periods and also caps early-termination charges payable where customers fail to comply with the agreed lock-in periods.

Under the ECL, a customer may terminate the agreement without incurring early-termination charges where the consumer:

• changes their primary residence permanently and the operator cannot provide the same or an equivalent service — in terms of characteristics and price — at the new address;
• loses disposable monthly income due to involuntary unemployment;
• is permanently or temporarily incapacitated for work or loses monthly income due to a long-term illness;
• moves to a third country, defined as an unforeseeable move of the contract holder's permanent residence outside of national territory; or
• is absent from their residence owing to imprisonment, or has become reliant on third-party care.

Although these additional grounds were introduced to protect interests the legislator deemed legitimate, the heavy reliance on vague terms — such as "unforeseeable move (…) out of national territory" or "loss of income due to illness" — is likely to give rise to implementation difficulties.

ANACOM has also launched an online platform through which consumers can submit termination requests and access contract information digitally.

5.6. Universal Service

Under the ECL, the universal service comprises a minimum set of services that must be made available to all consumers at an affordable price across the national territory, taking into account specific national conditions. Its purpose is to prevent social exclusion caused by lack of access and to enable citizens to participate actively in social and economic life.

The universal service must guarantee the availability of:

• reliable broadband internet access at a fixed location;
• voice communication services, including the necessary underlying connection, at a fixed location; and
• specific measures to ensure equivalent access for customers with disabilities to services available to other users.

The ECL introduces significant changes to the universal service regime, particularly by promoting social regulation through the so-called "social internet tariff".

5.7. Additional Mandatory Services

Under the ECL, the Government may require operators to provide additional services to the public within the national territory, beyond the universal service obligations. In such cases, a compensation mechanism must be put in place for the operators concerned.

6. Transport Obligations and Equipment

On public-interest grounds, ANACOM may impose signal-transmission obligations on companies operating in the television and radio programming services market, against adequate compensation.

Under the ECL, digital television equipment must be capable of decoding digital signals and of reproducing signals broadcast without encryption. Providers must also facilitate the interoperability of equipment so as to encourage its reuse.

Finally, any activity involving illegal devices — including their manufacture, import, distribution, sale, rental, installation, maintenance, promotion, acquisition or use — constitutes a serious administrative infraction.

An illegal device refers to any equipment or software specifically designed or adapted to enable unauthorised access to protected services in an intelligible form without the service provider's consent.

7. Fees, supervision and control

7.1. Rates

Operators providing communication networks and services under the general authorisation framework are subject to an annual fee. This fee is determined based on the administrative costs associated with managing, overseeing, and enforcing the general authorisation framework, the related rights of use and specific conditions.

Additionally, operators are responsible for additional fees related to the following:

• the allocation and renewal of frequency rights;
• the allocation, reservation, and renewal of numbering resource rights; and
• the allocation of rights of way.

7.2. Supervision and Control

7.2.1. Disclosure of Information

To effectively carry out its responsibilities, ANACOM is authorised to access and request information from operators when necessary, provided the request is objectively justified, non-discriminatory and reasonable.

Specifically, companies must provide financial data and any additional information requested by ANACOM or other competent authorities, as long as the need is established, to ensure compliance with administrative charges, licensing conditions, and other regulatory requirements. In general, operators must provide financial and technical information to guarantee compliance with obligations related to the services they are authorised to provide.

7.2.2. Control

As a regulatory body, ANACOM is responsible for overseeing the enforcement of the ECL, in addition to the Portuguese Food and Economic Security Authority (Autoridade de Segurança Alimentar e Económica – "ASAE") and the Portuguese Tax Authorities (Autoridade Tributária e Aduaneira). ANACOM is also in charge of supervising the electronic communications sector as a whole.

However, under the ECL and other relevant legislation, judicial courts and central Government agencies, such as the national cybersecurity agency (Centro Nacional de Cibersegurança – "CNCS"), hold a level of jurisdiction over the sector. These include the previously mentioned ANEPC (the emergency and civil protection agency), the Food and Economic Security Authority (Autoridade de Segurança Alimentar e Económica – "ASAE"), the Competition Authority (Autoridade da Concorrência – "AdC"), the Tax and Customs Authority (Autoridade Tributária e Aduaneira – "AT") and the district council's authorities.

7.2.3. New Sanctioning Framework

The ECL has significantly expanded its sanctioning framework. It now includes more than 120 administrative infractions, of which nearly 97% are considered severe or very serious, potentially resulting in fines of up to one million or five million euros.

Figure 1 - Distribution of administrative offences foreseen by the ECL according to their seriousness.

Regarding compliance with the end-consumer rules, more than 40 applicable sanctions account for over a third of the total ECL's administrative infractions under the ECL.

Figure 2 - Distribution of sanctioning rules according to the subject (as a % of all administrative offences covered by the ECL).

Under the ECL, issuing guidelines, recommendations, or instructions to employees, agents, or business partners that may lead to a violation of rules or ANACOM's instructions is considered a severe administrative infraction.

As opposed to the initial version of the bill presented by the Government in May 2022[12], the ECL does not include provisions for individual liability of members of management bodies and company directors.

Alongside a comprehensive list of violations for which operators are liable, under the ECL, a severe or very serious administrative offence occurs whenever an operator issues its employees, agents, or business partners with guidelines, recommendations, or instructions likely to result in a breach of rules on ANACOM's instructions.

It should be noted that this type of provision is rare within Portuguese law and seems to be a compromise when compared to the bill submitted to Parliament[13] that would have made company directors and senior staff operators personally liable. Considering the broad and ambiguous nature of these sanctioning provisions, we expect to see a rise in disputes and the consolidation of case law concerning how sanctions should be applied.

8. Open Internet Principle

The open internet principle ensures that citizens of the European Union have unrestricted access to online content and services, regardless of their location or time, without discrimination or interference from internet service providers.[14]

In Portugal, this principle is reflected in national law through the ECL, which states that any actions taken to maintain the quality of internet access must comply with Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25 November 2015.

The open internet principle is crucial today, where information is widely accessible online. It ensures that individuals and businesses have unrestricted and equal access to online content and services. For instance:

• internet service providers are prohibited from blocking or slowing down their competitors' content, applications, or services, except in limited circumstances, such as maintaining network security and integrity. Under this principle, e.g., internet providers must prevent unjustifiable blocking or slowing down content, applications, or services, except in limited cases, such as to maintain network security and integrity; and
• similarly, service providers must provide equal access to online content and services, free from undue interference driven by their interests and cannot prioritise traffic on their networks based on payments from a specific source.

In conclusion, it's important to note in cases of violation of the open Internet provisions, EU Member States are obligated to enforce sanctions that are effective, proportional, and dissuasive. Service providers found in breach may face both administrative and financial penalties.

The public tender for the new Central Algarve Hospital is now underway. The new hospital will follow built under a public-private partnership (PPP) covering the hospital's design, construction, financing, maintenance and operation.

With a base value of €426.6 million and a 30-year term, the project will be developed in Parque das Cidades (Faro/Loulé) and will serve around 297,000 residents, with increased demand during peak tourism periods.

The private partner will be responsible for the construction of the hospital infrastructure and the non-clinical services, while clinical services will remain under public management.

The tender notice has been published in the Official Journal of the European Union (available here).

1. The project

The Central Algarve Hospital is one of the most significant healthcare infrastructure projects currently underway in Portugal.

The project follows a DBFOM model, under which the private partner is responsible for the design, construction, financing, operation and maintenance of the hospital infrastructure.

The hospital complex must include:

• a minimum of 742 inpatient beds;
• specialised care units;
• diagnostic, surgical and outpatient facilities; and
• technical infrastructure, parking and a heliport.

The project will serve a resident population of approximately 297,000 people, rising to more than one million during peak tourist periods, which underscores its strategic importance for the region.

The management agreement which will be entered into between the project company and the contracting authority will have a duration of 30 years.

2. Procurement procedure

The procedure includes multiple stages:

• submission of tenders;
• evaluation of the tenders;
• negotiation with shortlisted bidders;
• submission of best and final offer; and
• final award decision.

The initial tender must include, among others, the following documents:

• European Single Procurement Document (ESPD);
• declaration of acceptance of the Specifications (Caderno de Encargos);
• financial proposal, including proposed annual payments;
• preliminary design (Estudo Prévio); and
• breakdown of partial prices for construction works.

The award will be based on the most economically advantageous proposal, taking into account the quality criterion and its relevant sub-criteria and the price criterion.

A performance bond (caução) equal to 5% of the expected net present value of the payments to be made by the contracting authority during the first third of the contract term will be required to be delivered to secure the proper performance of the management agreement.

3. Eligibility and requirements

Bidders must comply with the standard requirements applicable to public procurement procedures, including the absence of any impediments. No financial or technical requirements are imposed as a condition to participate.

The successful bidders must incorporate a Portuguese public limited company (sociedade anónima), governed by Portuguese law and with its registered office in Portugal, which will be responsible for the implementation of the project.

The project company must have a minimum share capital of €1,000,000 and an exclusive corporate purpose aligned with the project.

The project company must maintain, throughout the duration of the management agreement, an exclusive corporate purpose strictly limited to the activities covered by this agreement.

4. Hospital design and construction

The preliminary design must be submitted by the project company within 180 days of the effective date of the management agreement, followed by the full execution design within 180 days of its approval.

The project company is responsible for identifying all land use constraints and ensuring that they are duly reflected in the design.

The preliminary design must be reviewed and approved by the contracting authority within 60 days.
Construction must be carried out in accordance with the approved design, within the agreed timeframe, and in full compliance with the contractual requirements.

The hospital must enter into operation within 37 months from the effective date of the management agreement.

The project company must comply with all licensing, certification and regulatory requirements necessary for the proper performance of its obligations under the management agreement.

5. Operation and maintenance

During the operational phase, the private partner is responsible for the maintenance and operation of the hospital infrastructure.

This includes carrying out all necessary repairs, renewals, replacements, adaptations and upgrades to prevent obsolescence and ensure the continuous and proper functioning of the hospital complex.

The project company must also allocate the necessary human, technical and financial resources to ensure compliance with the management agreement.

6. Remuneration

The project company will be entitled to an annual remuneration in consideration for the availability of the hospital infrastructure and the performance of the contracted activities.

The remuneration includes a base component and a variable component, the latter reflecting deductions based on performance levels. It is designed to cover all obligations under the management agreement, with no additional payments due.

The remuneration will be due after the beginning of the operation of the hospital infrastructure.

Payments will be made through monthly instalments corresponding to 90% of the estimated annual remuneration, followed by a final reconciliation once the actual amount is determined, taking into account inflation and performance adjustments.

7. Financing

The project company will bear full responsibility for securing all financing required to place the hospital into operation, as well as to support its long?term maintenance obligations. This includes raising sufficient equity and arranging debt financing on commercially acceptable terms, without any guarantee, support, or financial commitment from the contracting authority beyond the availability payments contractually agreed.

The project company must ensure that the financing structure is fully compliant with the Specifications (Caderno de Encargos). All financing arrangements must be entered into prior to the execution of the management agreement.

The finance documents are subject to prior review and approval by the contracting authority. The project company must ensure that such arrangements do not restrict, condition, or otherwise impair its ability to perform its obligations under the project documents, nor limit the contracting authority’s contractual rights, including step?in or termination rights.

The project company remains fully liable for financing risk throughout the contract term, including refinancing risk, changes in market conditions, or increased financing costs.

8. Next steps

Applications are open until 24 August 2026.

Introduction

The new Portuguese Cybersecurity Legal Framework, approved by Decree-Law No. 125/2025 of 4 December (Regime Jurídico da Cibersegurança – RJC), entered into force on 3 April 2026, marking a significant step in the transposition of Directive (EU) 2022/2555 of 14 December 2022 (NIS 2 Directive) into Portuguese law.

This framework is complemented by the draft implementing regulation of the RJC, which was submitted for public consultation by the National Cybersecurity Centre (Centro Nacional de Cibersegurança – CNCS) on 10 March 2026, with the consultation period running until 22 April 2026.

In this context, determining the personal scope of the RJC is particularly important, as it identifies which entities are subject to the new regime and on what legal basis.

At European Union level, the NIS 2 Directive lays down the objectives and outcomes that Member States must ensure in order to achieve a high common level of cybersecurity across the Union. The RJC transposes the NIS 2 Directive into Portuguese law by defining, inter alia, the entities falling within its scope, the relevant institutional architecture, the categories of entities subject to the regime, and the obligations relating to identification, registration, notification and compliance. The draft implementing regulation of the RJC further specifies the practical application of the regime, in particular as regards the operation of the electronic platform, the minimum cybersecurity measures, the compliance levels and the notification procedures.

Whether an entity is subject to the regime does not depend solely on its sector of activity or place of establishment but rather requires an integrated assessment of the legal criteria applicable to private and public entities, including the relevant sectoral or organisational framework, the territorial connecting factors, the entity’s size, its criticality and its final classification as an essential entity, an important entity or a relevant public entity.

This study analyses the personal scope of the new regime and the qualification framework applicable to private and public entities potentially falling within the scope of the RJC.

WHICH ENTITIES FALL WITHIN THE SCOPE OF THE RJC?

Private entities

1.does the entity fall within a type listed in annex i or annex ii to the rjc?

If not
→ in principle, outside the personal scope

If yes
→ proceed to the territoriality assessment

 

2. Is there a territorial connection to Portugal?

If not
→ it is not subject to the Portuguese legal framework
If yes
→ proceed to the substantive assessment

 

3. Does it provide services or carry out activities in the European Union?

If not

→ it is not covered under the default rule
If yes

→ proceed to the size assessment

 

4. Is it a medium-sized enterprise or does it exceed the thresholds for a medium-sized enterprise?

An entity’s subjection to the regime does not depend solely on having a registered office in Portugal. It may also result from the way in which the service is provided, the place where cybersecurity risk-management measures are decided, and, in certain cases, the need to protect national territory.

Is any special criterion met even if the size criterion is not?

Even if the size criterion is not met, an entity of a type listed in Annex I or II may still fall within scope if it:

If the entity falls within scope, is it an essential or important entity?

Why transform the way we work?

Our Purpose

Clarity, straight to the point, no legal jargon. Deep understanding of the law. Rigour and precision. Practical and commercial oriented solutions. These are our purposes.

Why Use AI

Artificial Intelligence (AI) and automation will be (are) key tools to ensure that we fulfil our purposes.

AI can help us to deliver greater value, more efficiently and to a higher standard, while also improving both our individual skills and the overall capabilities of the firm.

Macedo Vitorino & Key Terms

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Legal Translations with AI

Use Case I: Translate

The challenge

Legal translations are complex and difficult because precision in the translation of legal concepts is crucial.

1. Introduction

In any EU single-currency economy, a GDP growth of 2.4%, an increase of 2.8% in employment, and inflation close to the European Central Bank’s 2% target are generally the hallmarks of a good year. However, the decline of 2.6 p.p. in the debt-to-GDP ratio, persistent budget surpluses, increased public investment and political stability made the Portuguese economy a top performer among its peers in 2025.

In such an environment, the technology, media, and telecommunications (TMT) sector broadly reflected the overall economic performance. Investment levels were significant, particularly in fibre deployment and the reinforcement of mobile broadband, while major operators recorded favourable revenue growth and maintained positive business margins.

The year was also marked by relevant technological and regulatory developments. The continued rollout of next-generation networks, the increasing relevance of digital services and data, and the growing focus on cybersecurity and network resilience influenced both market activity and public policy. These developments took place within a regulatory framework increasingly shaped by ever-changing European legislative initiatives.

This report analyses the key developments in the TMT sector in Portugal in 2025, focusing on the primary economic, technological and regulatory factors that characterised the year and are likely to influence the sector’s future outlook.

Lastly, a final chapter has been included to provide an outlook for 2026, based on the key trends expected to shape the market’s evolution. This section places particular emphasis on regulatory developments, investment dynamics, and technological transformation.

2. Market overview

2.1. Communications Network Evolution

Taking the mobile services segment as an example and using the latest available data from ANACOM, the National Regulatory Authority, for the third quarter of 2025, the number of base stations equipped with 5G technology increased to 14,890. This represents a 40.6% increase compared to the same period in 2024 and reflects the installation of approximately 11.8 new 5G-enabled mobile stations per day over the preceding 12 months.

As a result, around 75% of the country’s 3.091 parishes (“freguesias”) across the national territory are now served by 5G mobile base stations, with a density of 144 5G stations per 100.000 inhabitants.

Regarding fixed networks, efforts to expand high-speed fibre infrastructure continued throughout the year. By year-end, fibre coverage of households and business premises reached approximately 96%, complemented by an additional four million households and commercial locations served by coaxial cable networks, as reported by operators.

With regard also to network development — albeit of a different nature — 2025 was marked by the landing of the 2Africa submarine cable in Carcavelos, notwithstanding the lack of immediate impact on end-user services. Launched in 2020, this system connects three continents and more than 33 countries, with the completion of its core infrastructure reached in 2025. With a total length of approximately 45.000 km (forty-five thousand kilometres), it is currently the world’s largest submarine cable system. Its connection to Portugal strengthens the country’s position as an Atlantic connectivity hub, aligning with the objectives set out in the National Data Centres Strategy published in the same year.

Finally, also with regard to submarine connectivity, the year was also marked by the reprogramming of the CAM submarine cable project, a ring linking mainland Portugal, the Azores and Madeira. This decision ensures the continuity of the project, with completion remaining scheduled for 2027. For further details on this topic, please refer to our newsletter.

2.2. Market Dynamics of the communications sector

Following the market adjustments triggered in the previous year by the commercial launch of a new operator capable, on its own, of competing with the three incumbent players, 2025 witnessed not only the materialisation of consolidation trends but also a series of significant transactions. These included the integration of NOWO into DIGI, the acquisition of Claranet by NOS, and the sale of MEO’s Covilhã data centre to Asterion Industrial Partners. Taken together, these transactions amounted to an estimated total value of approximately €420 million[1].

No annual review would be complete without reference to developments in retail pricing. While, from a structural perspective, the year did not bring major surprises, price behaviour proved unexpectedly volatile, particularly between the first and second halves of the year.

Accordingly, whereas the first half of 2025 reflected the lingering effects of imported inflation from the previous year, the second half saw a historically significant deflationary trend in the sector.

In October and November 2025, telecommunications prices fell to such an extent that, compared with the corresponding months of the previous year, they decreased by 2.7%, while the average rate of change in telecommunications prices over the preceding twelve months stood at -0.6%.

2.3. Media markets

On the content side, 2025 was marked by the consolidation of a “hybrid news ecosystem”, in which traditional linear platforms – namely television and radio – continued to secure significant audience shares, while digital-native models, streaming services and AI-integrated newsrooms continued to make their way into the economics of content production and distribution.

The defining event of the year was the continuation of market restructuring, illustrated by the entry of MFE-MediaForEurope into the Portuguese market through the acquisition of a strategic stake in Impresa, the sustained leadership of Media Capital in the television ratings war, and the launch of the “News Now” channel by the Medialivre group.

Simultaneously, the regulatory environment became increasingly active, with the government introducing a 30-measure Media Action Plan (PACS)[2], designed to address long-term sustainability challenges, ranging from the gradual removal of advertising on the public broadcaster, RTP, to enhanced support for local and regional journalism.

Television remains the primary vehicle for mass information and entertainment in Portugal, reaching more than 90% of the population on an annual basis. Despite growing competitive pressure from Over-the-Top (OTT) streaming services, linear television still represents close to 90% of total viewing time, largely sustained by live events, fiction programming and strong public demand for 24-hour news coverage.

The Portuguese radio market remained resilient in 2025, attracting more than seven million weekly listeners, alongside an estimated 2.4 million podcast downloads. By early 2025, 42,2% of Portuguese residents subscribed to at least one streaming platform, with total usage reaching 52% of the population.

This surge coincided with the first decline in traditional pay-TV subscriptions in 19 years, as reported by ANACOM in Q1 2025. While the Portuguese market had historically been relatively insulated from cord-cutting – largely due to the aggressive bundling strategies adopted by MEO and NOS – the entry of DIGI, offering high-speed internet without mandatory cable packages, appears to have triggered a structural shift in market dynamics.

2.4. The oportunity and risks of AI in media markets

Digital advertising in Portugal is valued at approximately €0.9 billion, accounting for a substantial share of the TMT economy. Businesses are increasingly shifting budgets toward data-driven, targeted advertising, although the rise of ad-blocker usage (affecting 30% of users) poses a €150 million revenue risk for the sector.

AI has been integrated into the "back office" of most major media groups, with the Medialivre group reporting that around 75% of its content is automatically classified using AI tools, enhancing newsroom efficiency. However, the Reuters Institute's 2025 report highlights that "Trust in News"[3] has fallen to its lowest point in a decade (54%), largely due to the public’s fear of AI-generated disinformation and the cuts in newsroom staff.

2.5. Digital Technologies

The most profound transformation in the Portuguese digital technologies market in 2025 occurred in the data centre segment. Until then, Portuguese data centres - mostly operated by communications companies like MEO or NOS and utilities such as REN (the national electrical grid operator) - were smaller and, as such, did not support the higher densities required by modern AI.

Thus, the inauguration of the first unit of the Start Campus project in Sines (SIN01), along with new projects such as AI Campus (Edged/Merlin Properties) and AtlasEdge (Lisbon), was not a complement to the old market but a replacement infrastructure designed for the AI and hyperscale cloud economy.

On the other hand, NOS’s acquisition of Claranet Portugal for €152 million demonstrated another evolution worth mentioning. By integrating Claranet’s competencies in cloud, cybersecurity, and AI, NOS positioned itself not just as a provider of connectivity, but as a key player in the digital technologies market.

2.6. Threats

In 2025, Portugal offered one of the greenest electrical grids in Europe, with 87.5% of net electricity production coming from renewable sources a very positive feature of the national market. However, this proved to be a double-edged sword when, on 28 April, the electric grid was operating using mostly renewable sources in Portugal and Spain and suffered a severe instability, triggering a shutdown. This shutdown caused a blackout of the Spanish electricity grid, which cascaded across Portugal and brought large parts of the country to a standstill for several hours[4].

This near-unprecedented event placed the resilience of communications networks under severe and unexpected stress, testing both their ability to continue operating and to recover under extreme conditions. The debate it triggered continues into 2026 and is likely to remain relevant for years to come.

3. Main regulatory developments

3.1. Overview

Developments in 2025 focused on the reinforcement of cybersecurity and critical infrastructure resilience through the transposition of the NIS2 and CER Directives, as well as on the development of new infrastructure supporting data transmission and electronic communications, notably through strategic investment in submarine cable systems aimed at strengthening connectivity and international data flows.

Regulatory action addressed key aspects of the electronic communications framework, notably through the approval of the number portability regulation, strengthening consumer protection by allowing end users to change providers more swiftly and at no additional cost, while lowering barriers to effective competition[5].

3.2. Network Connectivity and Infrastructure

In 2025, submarine cable infrastructure was elevated to the status of strategic national asset, embedded within long-term state planning and recognised as critical to international connectivity and systemic resilience. The year was marked by:

• Reinforcement of multi-year public expenditure authorisations for major Atlantic connectivity systems.
• Launch of preparatory studies for a complementary Azores ring cable system, expressly subject to open wholesale access obligations.
• Integration of enhanced cybersecurity and redundancy requirements into the design and operation of the infrastructure.

3.3. Cybersecurity and Critical Infrastructure Governance

Cybersecurity reform represented the most structurally transformative development of 2025. Portugal adopted a comprehensive framework aligned with the NIS2 Directive and introduced a national regime governing the resilience of critical entities. The new model is characterised by:

• Identification and categorisation of essential and important entities.
• Mandatory implementation of risk management measures covering technical, organisational and governance dimensions.
• Strict incident notification obligations with compressed reporting timelines.
• Reinforced supervisory and investigative powers for competent authorities.
• A strengthened sanctioning regime.

Cybersecurity compliance is no longer confined to technical departments. It now entails board-level oversight, documented risk governance structures and demonstrable operational resilience.

Telecommunications operators, digital infrastructure providers and certain technology service providers face sustained regulatory scrutiny and increased enforcement exposure.

3.4. Consolidation of Existing Regulations

Rather than introducing a new regulatory paradigm, 2025 deepened and operationalised the existing electronic communications framework. Key developments included:

• Standardisation of the methodology for calculating revenues relevant to the annual regulatory contribution.
• Introduction of a mandatory electronic declaration model subject to enhanced audit mechanisms.
• Adoption of a more detailed and operationally precise number portability regime, strengthening switching procedures and inter-operator cooperation.
• Clarification of the regulatory qualification of international wholesale traffic carrier services.
• Updating of technical rules concerning electromagnetic field monitoring, radiocommunications stations and reduced-area wireless access points, reflecting technological developments such as 4G and 5G deployment.

Compliance now depends on detailed adherence to operational standards and reporting obligations, with reduced space for interpretative flexibility.

3.5. Data Governance and Intermediation

The European data governance framework became fully operational at national level during 2025. Competent authorities were formally designated and supervisory powers over data intermediation services were attributed to the telecommunications regulator.

The regime introduces:

• Regulatory oversight of providers facilitating controlled data-sharing environments.
• Organisational and neutrality requirements applicable to data intermediation services.
• A specific sanctioning framework applicable to non-compliance.

This development expands the regulatory perimeter beyond traditional telecommunications or hosting activities. Digital platforms and entities acting as neutral intermediaries in data ecosystems are now subject to structured national supervision, particularly where they enable trusted data-sharing mechanisms.

3.6. Data Centres, AI-Oriented Infrastructure and Digital Sovereignty

Portugal continues to lack a dedicated data-centre statute. Data centres remain subject to general legal regimes, with the applicable framework depending on the services provided and on whether the operator also performs electronic communications functions.

However, 2025 marked a significant policy inflection point. The Government announced a National Strategy for Data Centres, with particular emphasis on infrastructure designed to support artificial intelligence workloads. The strategy includes:

• Creation of pre-licensed zones to facilitate rapid deployment of large-scale digital infrastructure.
• Development of a sovereign cloud for public-sector services, reinforcing trust in local data storage.
• Positioning Portugal as a destination for AI-driven investment and large-scale compute facilities.

Data centres may fall within the scope of electronic communications law where they operate network elements and may qualify as essential or important entities under the strengthened cybersecurity framework, depending on scale and activity.

4. 2026 Outlook

The year 2026 will unfold against the proposed overhaul of the European electronic communications framework. In early 2026, the European Commission presented a proposal for a Digital Networks Act intended to replace the European Electronic Communications Code with a directly applicable Regulation. If adopted, this reform will shift the EU model from directive-based harmonisation to a more centralised regulatory structure.

In Portugal, 2026 is therefore expected to focus less on new legislation and more on enforcement and implementation of frameworks adopted in 2025.

• Cybersecurity. With the national NIS2-aligned regime, 2026 is expected to focus on supervisory activity and compliance verification. Essential and important entities will be required to demonstrate the effective implementation of risk-management systems, supply-chain controls, incident-response mechanisms and governance structures.
• Network infrastructure and submarine cables. Following the designation of certain submarine cable systems as strategic digital infrastructure, 2026 will focus on implementation, notably investment execution and enhanced security integration. International connectivity will remain sensitive amid growing geopolitical scrutiny. The key challenge will be balancing open access with reinforced security and resilience requirements.
• Data centres. The continued expansion of hyperscale and AI-oriented data-centre facilities is expected to remain one of the most structurally relevant developments in the Portuguese TMT landscape. Operators providing electronic communications services or managing signal transmission will remain subject to the electronic communications framework, while large-scale facilities may fall within the scope of enhanced cybersecurity supervision. Data-protection compliance will increasingly intersect with operational design, particularly in cloud-based and AI-supported environments.
• Data governance and digital intermediation. With the national implementation of the European data governance framework now operational, 2026 is likely to bring closer scrutiny of data intermediation services. Entities facilitating controlled data-sharing environments may face increasing attention regarding neutrality, organisational separation and transparency obligations.
• Artificial intelligence regulation. Although the AI Act primarily regulates developers and deployers of high-risk systems, 2026 is expected to reveal its indirect impact on infrastructure providers. Data-centre operators and cloud-service providers may face heightened contractual demands relating to availability, auditability, traceability and security. The interaction between AI compliance, cybersecurity governance and data-protection requirements is likely to increasingly influence contractual structures and operational standards, even where infrastructure operators are not directly regulated as AI system providers.

AI and consolidation. The media market primary challenge is integrating AI while maintaining trust and achieving the scale needed to compete with Big Tech. The MFE-Impresa connection signals a strategic consolidation aimed at ensuring the survival of local players through increased market presence. On the State’s initiatives, the success of the Media Action Plan will undoubtedly depend on fostering a diverse, financially independent ecosystem that can sustain Portugal’s democratic discourse.

1. Introduction

In 2025, Portugal's renewable energy sector experienced robust growth, driven by solar expansion and supportive policies. Renewable sources met 68% of electricity demand, with total production reaching a record 37 TWh. Electricity consumption hit an all-time high of 53.1 TWh, up 3.2% from 2024. Installed solar capacity surged to around 6.8 GW by year-end, reflecting significant increases in both utility-scale and decentralized systems. Self-consumption installations, primarily solar PV, saw notable additions, contributing to energy decentralization. Market players have expanded through new investments and projects, with foreign firms like Neoen assuming greater roles alongside domestic leaders, despite the Portuguese energy sector remaining anchored by strong domestic and Iberian players.

2025 saw the adoption of several legislative and regulatory measures in Portugal with impact on the renewables market. Among the most relevant was the abolition of the clawback mechanism. Introduced in 2013, the clawback consisted of a financial compensation charged to electricity producers, intended to offset perceived distortions in the Iberian electricity market resulting from differences between Portuguese and Spanish taxation, and which has been widely contested by market players. Its repeal, effective as from the 2025 financial year, puts an end to a long-standing charge on producers and represents an important step towards improved investment conditions in the Portuguese renewable market.

Alongside the end of this long-standing mechanism, national lawmakers and regulators adopted several measures of relevance to renewable energy projects, including the launch of new licensing and competitive procedures for biomass power plants, important clarifications on the environmental and licensing framework applicable to energy storage projects, the approval of a new legal and regulatory framework for electric mobility, as well as initiatives addressing grid capacity constraints, energy efficiency and the mitigation of energy poverty.

This report provides an overview of the Portuguese renewables market in 2025, highlighting the main transactions that took place in the year and those that are still unfolding, and reviews the legal and regulatory developments of 2025.

In the last chapter we give our outlook for 2026, analysing the main trends expected to define the market’s evolution, with particular emphasis on system flexibility, storage deployment, demand growth and grid integration challenges.

2. Market overview

2.1. Production growth

In 2025, renewable sources generated 37 TWh of electricity in mainland Portugal, supplying 68% of national electricity demand, the highest share ever recorded in the Portuguese power system.  This surpassed the 2024 record of 36.7 TWh, despite grid?security constraints following the 28 April blackout and related curtailments.

For the first nine months of 2025, renewables covered around 70% of demand, with hydropower at ~28%, wind at ~24%, and solar at ~13%, complemented by bioenergy and other small?scale sources.  In July 2025, renewables reached 71.4% of mainland generation, driven by strong wind and solar output.

Some other interesting facts occurred in 2025:

• While Portugal has historically been a "wind and water" country, 2025 was the year Solar PV (Photovoltaics) moved from a supporting role to a protagonist. For the first time, monthly solar generation surpassed wind. This is significant because wind power is often erratic, whereas solar provides a predictable "baseload" during daylight hours. Of course, this massive solar influx led to extremely low (and sometimes negative) energy prices during the day, which pressured the profitability of older power plants.
• A huge chunk of this growth came from UPACs (Self-Consumption Units). Portuguese households and industries installed record numbers of rooftop panels, reducing their dependence on the national grid and lowering prices during peak sun hours.

2.2. Increase in production capacity 

By end?2025, total installed capacity from renewable sources in Portugal was around 21.1 GW, up from roughly 19 GW at end?2023, implying a cumulative increase of about 2.1 GW over two years.  Solar PV capacity alone reached 6.17 GW by May 2025, with 499 MW added between December 2024 and May 2025, split between utility?scale (264 MW) and distributed (235 MW).

Solar generation grew strongly, with 10,759 GWh produced from January to September 2025, up from 8,544 GWh in the same period of 2024, representing a year?on?year increase of about 26%.  Wind and hydro also expanded, with wind output rising around 10% year?on?year in the third quarter and hydro up 23%, reinforcing the diversification of the renewable mix.

Renewable Electricity Production by Market Participantes (2025)

Rank	Producer	Main Source(s)	Estimated Production (TWh)
1	EDP Renováveis	Hydro, Wind, Solar	16.0 (Hydro: 12.5; Wind: 3.0; Solar: 0.5)
2	Iberdrola	Hydro, Wind	3.7 (Hydro: 1.8; Wind: 1.9)
3	Finerge	Wind	2.0
4	Ventient Energy	Wind	1.5
5	Industrial Self-Consumption (Aggregated)	Solar	1.5
6	TrustEnergy (ENGIE/Marubeni JV)	Wind	1.5
7	Galp	Solar	1.5
8	Residential Self-Consumption (Aggregated)	Solar	1.5
9	Neoen	Solar	0.5
10	Acciona	Wind	0.3

2.3. Market context: demand, imports, and prices 

Total electricity consumption reached 53.1 TWh in 2025, an increase of 3.2% year?on?year (or 2.3% in weather? and calendar?adjusted terms). This increase was mainly driven by higher demand from data centres and industrial consumers, alongside continued economic activity. Portugal remained a net importer of electricity, with net imports of 9.3 TWh. Although this represented an 11% decrease compared to 2024, imports still accounted for around 17% of total electricity demand.

Wholesale prices were volatile, with notable spikes (e.g., a 77.6% month?on?month price rise in February 2025), but the high renewables share helped contain overall system costs, with renewables estimated to have saved around €5 billion in wholesale?market expenditures in the first seven months of the year.

3. Main events

3.1. The new PNEC 2030 objectives

Portugal continued in 2025 to implement the National Energy and Climate Plan 2030 (PNEC 2030), which was updated and reinforced in 2025 to reflect higher ambitions in renewables, electrification, and sector coupling.  The plan now targets[1]:

• Renewable?based electricity from 20.8 GW of installed solar PV by 2030 (up from roughly 6.1–6.2 GW at mid?2025) and 10.4–12.4 GW of wind capacity, implying a substantial pipeline of onshore projects and early?stage offshore planning.
• Overall renewable share in final energy: The PNEC 2030 envisages renewables covering around 80% of electricity consumption and a significant increase in renewable share in heating/cooling and transport, supported by electrification and green hydrogen.

Several policy levers linked to PNEC  2030 have been implemented in 2025:

• Auction?driven deployment: While no large-scale solar or wind auctions were launched in 2025, the PNEC 2030 framework continued to rely on competitive procedures as a core deployment tool. In this context, specific tender mechanisms were advanced or prepared, including new competitive procedures for biomass power plants, the announced competitive process for battery energy storage systems focused on system services, and the preparatory work for the first offshore wind tender.
• Permitting and grid?access reform: The government continued to pursue reforms aimed at streamlining environmental and grid?connection procedures, including digitalisation of licensing and clearer timelines, to absorb the surge in solar and wind projects without further congestion.
• Sector coupling: The PNEC?aligned strategy promotes green hydrogen and advanced biofuels, notably around industrial hubs such as Sines, where Galp and other players are developing large?scale projects.

3.2. The April 2025 blackout 

The major blackout of 28 April 2025, which originated in Spain and propagated into Portugal, triggered a comprehensive grid?security and resilience package announced in late July 2025. This technical incident was a wake-up call for the Iberian electrical system and highlighted several structural vulnerabilities.

• System inertia: As the electricity system continues to shift away from conventional synchronous generation (coal and gas-fired plants) towards inverter-based renewable technologies such as solar PV and wind, overall system inertia has been progressively reduced. The April 2025 incident demonstrated that, under certain conditions, the grid has become more sensitive to sudden frequency disturbances;
• Reliance on thermal generation for system stability: In the aftermath of the blackout, the Portuguese transmission system operator (REN) was required to maintain gas-fired generation online more frequently than initially planned in order to ensure frequency control and operational security. As a result, despite record levels of installed renewable capacity, natural gas generation remained an important component of the electricity mix in 2025.

The core measures within this package are:

• Launch of a 750 MVA BESS auction to provide fast-response reserves and other system services, including frequency and voltage support during contingency events.
• €137 million allocated to modernise operational and control capacity of the transmission and distribution networks, including advanced SCADA/EMS systems and improved monitoring tools.
• Reinforcement of cross?border interconnections with Spain and the wider European grid, to reduce vulnerability to single?point failures and improve coordinated restoration.
• Doubling the number of black?start?capable plants from two to four, by adding Baixo Sabor and Alqueva to the existing Tapada do Outeiro and Castelo de Bode hydro plants.
• A €25 million grant programme for backup infrastructure (including BESS and diesel?gensets) at hospitals, water utilities, and energy?sector facilities, to ensure continuity of essential services.

The post-blackout response package has accelerated investment in energy storage and grid modernisation, positioning hybrid wind and solar projects combined with battery energy storage systems (BESS) as a central component of the current investment pipeline. At the same time, the 75% renewable charging requirement, together with relatively limited support levels, has exposed a degree of tension between security-of-supply objectives and the economics of purely merchant storage projects. This tension has, in turn, intensified calls from market participants for greater regulatory clarity and further evolution of market-design arrangements.

3.3. The 750MW BESS auction

In July 2025, the Portuguese government announced its intention to launch a competitive tender for up to 750 MVA of battery energy storage capacity, as part of a broader €400 million package aimed at strengthening grid resilience and system security. The tender is primarily designed to procure system services and flexibility resources, including fast-response reserves, frequency control and other ancillary services, with the objective of reducing reliance on gas-fired generation for balancing and contingency support.

The announced target is 750 MVA of BESS capacity, with installations expected to be connected at both transmission and distribution levels, depending on system needs. Unlike previous storage-support discussions, the envisaged mechanism is not primarily intended to promote the hybridisation of storage with renewable generation assets, but rather to secure standalone or functionally dedicated flexibility resources capable of supporting system operation.

Although the tender was expected to be launched before January 2026, the corresponding implementation proposal and tender documentation had not been published as of year-end 2025. Market expectations nevertheless remain that the competitive procedure will be launched during the first half of 2026.

While the mechanism is expected to improve the bankability of storage projects focused on system services, its overall support levels are anticipated to be more limited than comparable schemes in other European jurisdictions - such as Spain’s PERTE-storage programme. This has fuelled industry concerns regarding the revenue stack available to storage projects, particularly considering the 75% renewable-charging requirement, and has reinforced calls for greater clarity on long-term, market-based remuneration frameworks for flexibility resources.

3.4. The end of the Clawback Tax

Introduced in 2013, the clawback mechanism consisted of a financial charge imposed on electricity producers, originally intended to offset perceived distortions in the Iberian electricity market (MIBEL) arising from differences between Portuguese and Spanish taxation. Although conceived as a corrective tool in a crisis context, the mechanism proved complex, unpredictable and economically marginal, and was widely contested by market participants for generating regulatory uncertainty and discouraging investment.

Over time, the clawback increasingly revealed structural shortcomings. In particular, it introduced a bias in favour of electricity imports, penalising domestic generation and running counter to the objectives of energy autonomy, renewables deployment and electrification enshrined in the National Energy and Climate Plan 2030 (PNEC 2030). These effects became more pronounced as the Portuguese electricity system evolved towards higher renewable penetration and deeper Iberian market integration.

Against this background, Decree-Law No. 139-B/2025 formally repealed the clawback mechanism, with effect from the 2025 financial year. In accordance with the principle of legal certainty, the repeal does not affect settlements relating to 2024, which remain payable. The elimination of the clawback represents a meaningful step towards regulatory simplification and enhanced predictability in the Portuguese electricity sector.

From a market perspective, the repeal removes a long-standing cost component from the electricity production chain, with the potential to contribute, over time, to more stable and competitive electricity prices. More importantly, it improves the overall investment climate by reducing regulatory risk, thereby reinforcing Portugal’s attractiveness for renewable energy and flexibility investments.

The measure was welcomed by industry stakeholders, including the Portuguese Renewable Energy Association (APREN), as a decisive signal in favour of regulatory stability and cost efficiency. Analysts and specialised consultancies have likewise underscored its positive implications for market competitiveness and long-term investment, viewing it as a shift away from complex corrective mechanisms towards a more transparent and market-oriented regulatory framework.

4. Main regulatory developments

4.1. Overview

The main legislative developments in the Portuguese energy sector in 2025 included new licensing procedures for electricity storage facilities with pre-allocated grid injection capacity; benefits for electro-intensive consumers; new biomass production and electric mobility frameworks and the new OMIP bilateral contracts’ negotiation platform. You can find below more detailed information on these regulatory developments[2].

4.2. BESS access to the national grid

Access to grid remains today a challenge for BESS project developers in Portugal, as there is not yet a clean regulatory path to obtain it. Still, in 2025 we saw Ministerial Order No. 1859/2025 allowing the use for BESS of previously allocated injection capacity in the public electricity grid. It applies to:

• Technology changes in unbuilt solar power plants with an injection capacity reservation title (Título de Reserva de Capacidade – “TRC”); and
• Standalone or co-located storage with previously allocated injection capacity reservation in the public grid for a renewable energy power plant.

Under this framework, the TRC holder may request the conversion of an existing solar TRC into a storage TRC by submitting an application to the Portuguese energy authority (DGEG). The request is assessed by the relevant grid operator and by the system operator (REN), which issue opinions on charging power and operational constraints within defined timeframes. Once approved, the modified TRC is issued by the grid operator following DGEG authorisation.

Pre-allocated injection capacity reserved under a TRC for renewable generation may also be used to apply for production licences for autonomous or co-located storage facilities connected at the same grid connection point (in the National Transmission Grid) or circuit (in the National Distribution Grid).

In such cases, the TRC holder must submit an application to DGEG—together with the explicit authorisation of the storage project holder—accompanied by the documentation listed in Annex I to Decree-Law No. 15/2022. The application must also include a description of the intended operating conditions of the storage facility, notably maximum charging and injection power through the public grid, as well as a written coordination agreement between the storage and generation project holders governing operational coordination and energy injection.

DGEG assesses compliance and requests opinions from the relevant grid operator and from the system operator regarding maximum charging capacity and any applicable operational restrictions. Where the opinions are favourable, DGEG is required to issue the production licence within 30 days.

The storage facility may not be simultaneously coordinated with more than one autonomous storage installation. However, it may benefit from injection capacity reserved under multiple renewable generation projects, subject to compliance with applicable grid and operational constraints.

4.3. Electro-Intensive customers

The European Commission has finally approved in 2025 Portugal’s aid scheme for electro-intensive industries, completing the implementation of the Electro-Intensive Consumer Statute (“ECS”)[3]. This scheme includes:

• Partial reduction (up to 85%) in costs of general economic interest (“CGEI”) on grid-supplied electricity.
• Full CGEI exemption on self-consumed energy delivered through the public grid.
• Risk hedging mechanism (minimum 10%) for renewable-sourced electricity under long-term contracts.
• Waiver of proximity requirements between self-consumption units and facilities.

Beneficiaries must invest at least 50% of the aid in carbon intensity reduction projects and ensure that at least 30% of their electricity consumption comes from renewables (via contracts, self-consumption, or sustainability initiatives).

The benefits are applicable to sectors like ceramics, glass, metalworking, and textiles. To benefit from them, requirements include: (i) to have an annual electricity consumption exceeding 1 GWh; (ii) that at least 40% of the consumption occurs during off-peak periods; and (iii) that the electro-intensity is equal to or greater than1 kWh per euro of gross value added (three-year average).

4.3.1. The new standard agreements

In June 2025, DGEG approved draft standard adhesion agreements for the ECE, applicable to all adhesion requests filed from 2025 onwards.

Applications must be submitted to DGEG by 15 June of each year, together with the required supporting documentation. DGEG is required to issue its decision within 30 days of submission, and successful applicants receive a draft adhesion agreement for signature within five days.

Standard adhesion agreements are valid for four years and may be renewed for successive four-year periods upon submission of a renewal request. Conditional adhesion agreements—applicable to facilities with less than three years of operation—are valid for three years and require a subsequent application for conversion into a standard adhesion agreement.

In both cases, failure to submit a renewal or conversion request by 15 June of the final year of validity results in termination of the agreement.

4.3.2. Grid Access Tarifs

In 2025 Portugal’s Energy Services Regulator (“ERSE”), approved network access tariffs for facilities qualified as intensive electricity consumers (“ECE”). These new rules provide benefits for ECE facilities, including a 75% or 85% reduction in the General Economic Interest Costs of the network access tariffs, as well as a full exemption in the case of self-consumption, even if supplied via the public grid.

4.4. Biomass power plants

In October 2025, the Portuguese Ministry of Environment and Energy adopted Ministerial Order No. 358/2025/1, implementing Decree-Law No. 64/2017 and setting out the procedural framework for applying for production and operation licences for biomass power plants. The regime applies in particular to new forest biomass plants promoted by municipalities, intermunicipal entities or municipal associations

The Ministerial Order clarifies the documentation required at each licensing stage, namely:

• Production Licence: an  opinion from the Portuguese Institute for Nature Conservation and Forests (ICNF) confirming biomass sustainability and availability, copies of biomass supply contracts, the Single Environmental Title (TUA) and the design of the carbon capture project.
• For the operation Licence: The documentation listed in Article 33(3) of Decree-Law No. 15/2022.

Requests for an ICNF opinion must include, in particular, a 10-year biomass supply forecast, installed capacity, estimates of available forest and agricultural biomass, and measures to ensure sustainability, local coordination and traceability of biomass sources.

As regards the carbon capture requirement, the Ministerial Order allows for a waiver upon submission of a duly justified request to the DGEG, supported by an independent technical assessment demonstrating technical or economic infeasibility. The decision is issued by the Ministry and is valid for up to three years.

4.5. Electric Mobility

A revised legal framework for electric mobility was introduced by Decree-Law No. 93/2025, aligning Portuguese law with EU Regulation 2023/1804 (“AFIR”)[4]. The new regime represents a structural liberalisation of the electric mobility sector, replacing the previous centralised model with a market-based framework aimed at accelerating the deployment of charging infrastructure, enhancing competition and ensuring universal and non-discriminatory access to charging services.

Key changes compared to prior scheme include:

• Full liberalisation of charging infrastructure deployment and operation: The centralised network-management model is abolished, allowing charging point operators and mobility service providers to independently install, own and operate charging networks, while ensuring non-discriminatory access for all users.
• Elimination of the “electricity supplier for electric mobility” role: Operators may now procure electricity directly from the market, through bilateral contracts or self-consumption arrangements, and freely contract with other mobility service providers, aligning electric mobility with general electricity market principles.
• Mandatory ad hoc charging and smart charging functionalities: Public charging points must allow contract-free access via bank cards or QR codes. The framework also promotes smart and bidirectional charging, including vehicle-to-grid solutions, enabling electric vehicles to actively support the electricity system.
• Interoperability and cross-border integration: The regime facilitates interconnection with international charging networks, enabling seamless cross-border charging and payment solutions.
• Introduction of tradable “avoided CO?” certificates: Certificates linked to the use of renewable electricity in electric mobility are created to support decarbonisation objectives.
• Data governance and transparency: Operators are required to submit operational data to a neutral electric-mobility data aggregator, which forwards the information to the national access point managed by the Institute for Mobility and Transport (IMT).
• Streamlined licensing and digitalisation: Authorisation procedures are simplified, with reduced timelines, the introduction of prior notification and potential tacit approval mechanisms, and full digitalisation through the Single Digital Services Portal.

A transitional period applies until 31 December 2026, allowing market participants to progressively adapt from the former regulated model to the new liberalised framework.

4.6. OMIP PPA Platform

Power Purchase Agreements (“PPAs”) have become increasingly relevant as instruments for price stabilisation and for financing renewable energy projects. In Portugal, however, their use has historically been limited when compared to other European markets, mainly due to reduced transparency on prices and contractual conditions, lack of standardisation and legal uncertainty, particularly in contracts involving final consumers.

To address these shortcomings and promote the development of a PPA market, Decree-Law No. 99/2024 established the basis for bilateral energy registration and contracting. This framework was further developed by Ministerial Order No. 367/2024/1, which established a dedicated electronic platform managed by OMPI, S.A. (the “OMIP Platform”)[5] and by the Procedures Manual for the Activity of Registration and Bilateral Contracting of Electrical Energy, enacted by ERSE through Directive No. 11/2025.

Registration of PPAs on the OMIP Platform is mandatory for bilateral physical PPAs that cumulatively meet the following criteria:

• Involve physical delivery of electricity;
• Have a term exceeding one year, or a shorter duration combined with automatic renewal clauses;
• Have a minimum hourly nominal capacity of 1 MW and an annual volume of at least 1.5 GWh;
• Involve at least one counterparty domiciled in the Portuguese electricity system; and
• Are concluded between a producer (or its representative/aggregator) and a buyer (acting as supplier, aggregator or final consumer).

PPAs must be registered within five business days of execution through the submission of key information on the parties, the entity responsible for energy scheduling, the development status of the project and the main commercial terms.

While registration is mandatory, the use of the OMIP Platform for negotiation and execution of PPAs is voluntary. The platform may be used to publish and consult contractual terms, exchange information through a confidential messaging channel and negotiate PPAs, with access to model clauses and draft contracts that support contractual standardisation and promote more balanced and legally robust agreements, particularly for smaller or less experienced market participants.

The OMIP Platform represents a significant step towards increased transparency, standardisation and liquidity in the Portuguese PPA market. By combining mandatory registration with optional negotiation and contracting tools, it balances regulatory oversight with contractual freedom, while reducing legal uncertainty and facilitating the matching of supply and demand in long-term renewable energy contracting.

5. 2026 Outlook

After a record year for renewable output and a stress-test event for system security (the April 2025 blackout), 2026 is expected to be less about announcing new targets and more about integrating large volumes of variable renewables into a constrained grid. The key market theme is therefore flexibility, understood as the power system’s capability to absorb excess energy output, manage congestion, and maintain frequency and voltage stability, placing energy storage and other flexibility resources at the centre of system operation and regulatory focus.

This integration challenge will be compounded by continued growth in electricity consumption, particularly driven by large-scale data centres and other electrification trends, as well as by the expected preparation and possible launch of the first offshore wind tender.

• Storage and system flexibility will move to the centre of the electricity system. The rapid expansion of solar generation in recent years, combined with increasing grid congestion and reduced system inertia, has made flexibility a structural requirement of the Portuguese power system. While storage deployment to date has focused predominantly on co-located solutions, leveraging injection capacity previously allocated to renewable generation projects, the integration challenges exposed in 2025 have highlighted the need to enable standalone storage at scale. In this context, Portugal’s post-blackout resilience agenda has placed storage at the core of system operation, with the government announcing a competitive procedure for up to 750 MVA of battery energy storage, primarily aimed at the provision of system services—including fast-response reserves, frequency control and grid-stability support—and expected to be launched before January 2026. This mechanism reflects a policy focus on security of supply rather than on merchant storage or pure energy-arbitrage models. Looking ahead to 2026, the central issue for storage deployment will be the availability of effective and bankable grid-access pathways for standalone BESS, beyond co-located configurations. These pathways are expected to include (i) participation in capacity auctions dedicated to system services, (ii) the repurposing or shared use of previously allocated injection capacity (including the conversion of solar capacity reservation titles into storage or their use for autonomous storage at the same connection point), and (iii) the possible allocation of dedicated grid capacity for standalone storage projects where justified by system needs. In parallel, contractual grid-access arrangements with predefined operational restrictions are likely to remain relevant in constrained areas. Overall, 2026 is expected to shift the focus from recognising the importance of storage to enabling its practical deployment, with storage playing a decisive role in curtailment mitigation, frequency and voltage control, and the integration of both new renewable generation and large-scale consumption installations.
• Surging Demand - Data Centres. The continued expansion of data centres, particularly hyperscale and AI-driven facilities, is expected to remain one of the most significant developments affecting the Portuguese electricity system in 2026. In this context, the Start Campus project in Sines represents a structural shift in the national demand profile, introducing a gigawatt-scale data-centre campus model. Publicly available information and grid-access requests indicate that projects in the Sines area alone may require electricity capacity of up to approximately 1.2 GW at full build-out, with phased deployment already corresponding to several hundred megawatts of new demand in the short to medium term. This magnitude is material when compared with Portugal’s electricity system, where peak demand typically ranges between 9 GW and 10 GW and annual electricity consumption stood at around 53 TWh in 2025. As a result, large-scale data-centre developments are expected to have a direct impact on grid planning, reinforcement schedules and capacity-allocation decisions. In particular, they increasingly rely on the exceptional grid-access mechanisms applicable to High-Demand Zones, which were introduced to manage structurally congested areas where available grid capacity is insufficient to accommodate all consumption requests under the general access regime and have already been applied in locations such as Sines. At the contractual level, the scale, continuity and predictability of data-centre demand are expected to further stimulate the Portuguese PPA market, accelerating the use of long-term physical and financial PPAs, as well as hybrid supply structures and dedicated or co-located renewable generation combined with storage.
• Strengthening of the PPA market. PPAs are expected to assume a more prominent role in 2026 as tools for price stabilisation and for the financing of renewable generation and flexibility projects. Although historically underdeveloped in Portugal, the PPA market is now being reshaped by a combination of regulatory reform and structural growth in electricity demand. Since late 2025, the OMIP Platform has been in operation, providing a structured framework that facilitates PPA development and reduces transaction frictions. Looking ahead to 2026, PPA activity is expected to accelerate primarily in response to rising demand from large electricity consumers—most notably data centres—together with increased price volatility and persistent grid constraints. In this context, market participants are likely to make wider use of long-term physical and financial PPAs, as well as hybrid supply structures combining renewable generation with storage. The OMIP Platform is expected to support this expansion by improving transparency and contractual standardisation, thereby contributing to the gradual consolidation of a more liquid and bankable PPA market in Portugal.
• Electrification of Transport will continue to expand, increasing pressure on distribution networks. 2025 marked a tipping point for electric vehicles (EVs) in Portugal, as the deployment of charging infrastructure began to catch up with sales volumes, leading to a more widespread and intensive use of the electricity distribution grid. This trend is expected to continue in 2026, further increasing electricity demand at local and regional levels.
  Following the approval in 2025 of a revised legal and regulatory framework for electric mobility, which liberalised the installation and operation of charging infrastructure and replaced the previous centralised model with a market-based approach, 2026 is expected to focus on implementation and market adjustment. The steady increase in EV penetration, combined with the expansion of public and private charging networks, will require closer coordination between charging deployment and grid reinforcement, as well as the practical application of new rules of access, interoperability, data management and smart and bidirectional charging. While electric mobility does not generate demand volumes comparable to large data centres, it represents a structurally growing and geographically dispersed load that increasingly interacts with self-consumption, storage and local flexibility mechanisms.
• Offshore Wind will remain strategically relevant, though operation uncertainty remains. Offshore spatial allocation plan and the model for the first competitive procedure were approved in 2025, defining a centralised and sequential tender structure combining the allocation of maritime use rights (TUPEM) with subsequent grid-connection capacity and remuneration mechanisms. The framework covers the main offshore areas identified along the Atlantic coast—namely Viana do Castelo, Leixões, Figueira da Foz and Sines—and targets around 2 GW of installed capacity to be operational by 2030, within a longer-term ambition of up to 10 GW. Under the tender model approved in April 2025, the competent authorities were expected to prepare the detailed implementation proposal within 60 days and to complete the tender documentation within 180 days, i.e. by October 2025. These deadlines were not met, and uncertainty therefore remains regarding the timing of the first offshore wind tender, the sequencing of maritime zones and the allocation of grid-connection and onshore reinforcement costs.
• Renewable hydrogen will progress selectively, with limited short-term impact on the electricity system. Hydrogen and other renewable or low-carbon gases are expected to continue evolving in 2026, mainly in the context of industrial decarbonisation, sector coupling and targeted support mechanisms. Development efforts are likely to focus on securing offtake, implementing auction-based or contractual support schemes and addressing practical issues related to licensing, grid injection and environmental permitting. While hydrogen may provide an additional outlet for surplus renewable generation, particularly in industrial hubs, its contribution to addressing near-term electricity system constraints is expected to remain secondary when compared to storage solutions and demand-side flexibility.

1. Introduction

In a year marked by extraordinary political and economic changes, from the changes in US politics to the acceleration of the AI economy, as well as increasing geopolitical conflicts and tensions in the West and the East, Portugal has maintained a steady economic growth, although not impressive, that lead to positive results in the banking sector and Portuguese capital markets.

As Portugal experiences a period of political stability and mild economic growth, with public debt below 100% of GDP and economic growth slightly above 2%, several transactions stand out, such as the sale of Novo Banco, the commencement of construction on Portugal's first high-speed train link between Lisbon and Porto, and the launch of TAP's privatisation process.

On the regulatory front, few changes to bank resolution framework and the regulation of crypto-assets under European and national legislation represented the main developments of 2025, which were unspectacular in comparison with the overhaul of banking regulations that occurred in the last decade.

This report provides an overview of the Portuguese capital markets in 2025, highlighting the main transactions that took place in the year and those that are still unfolding, and reviews the legal and regulatory developments of 2025.

In the last chapter we give our outlook for 2026, as political, economic and military tensions intensify, and questions are raised as to the sustainability of the US stock market valuations, now dominated by the Magnificent Seven, and how this could affect Portugal, its economy and its banking sector.

2. Market overview

2.1. Macroeconomic environment

2.1.1. GDP growth

Portugal’s real GDP growth reached 2.1% in 2024 and is projected to reach 2% in 2025, according to the Bank of Portugal’s December 2025 Economic Bulletin.

GDP growth is supported by the implementation of the «Recovery and Resilience Plan» (Plano de Resiliência e Recuperação, "PRR") (2021-2026, €22,216 million) and easing financial conditions, including lower interest rates, robust domestic demand and expansionary fiscal policies. Other relevant data indicates that private consumption has also risen in 2025 due to higher disposable income availability, allowing families to spend more freely as their take-home pay increases.

2.1.2. Trade balance

Portugal maintains a robust external position, with a 2.1% account surplus in 2024, projected to average 3.0% of GDP in 2025-26 according to the Bank of Portugal. This is driven by EU recovery funds, which bolster banking sector liquidity and cross-border flows.

2.1.3. The labour market

The Portuguese labour market recovered from the COVID 19 pandemicwith unemployment near its historical lows. Companies now face difficulties in hiring and retaining skilled workers.[1]

The recent influx of migrants to Portugal is significant, with 2025 data indicating that foreigners comprise approximately 15% of the population, mostly unskilled workers. Conversely, the domestic population faces workforce misallocation, as many individuals are working in fields unrelated to their qualifications and educational backgrounds, resulting in an inefficient use of qualified workforce.

Another critical issue in the Portuguese labour market is the aging population, where individuals over 65 years of age represent nearly 25% of the total, projected to rise to 34% by 2040.

2.1.4. Public debt

As of October 2025, Portugal's total public debt stood at €238.1 billion, a €13.3 billion increase when compared to the same month of 2024. The country’s debt as a percentage of GDP has been decreasing consistently.

The debt-to-GDP ratio stood at 93.6% in 2024, a significantly lower level when compared to 2021, when it represented 137.5% of Portugal’s GDP, as depicted in the graphic below.

Robust tax revenues support this trend, but expenditure growth and aging-related costs, challenge fiscal sustainability, highlighting the need for reforms in pensions, healthcare, and tax simplification.

2.1.5. Housing market

Like many other Western countries, Portugal faces a housing affordability crisis; as prices have far outpaced income growth, buying or renting a home is increasingly difficult for most people, affecting more younger people. [2]

Recent government measures, such as tax incentives, aim to address these gaps, but further reforms are needed. The OECD recommends re-balancing rental regulations to attract more private investmenttempered with "sufficient and well-targeted housing allowances to protect low-income tenants".

Longer term measures must be adopted to increase the housing supply, such as public funded housing projects in the form of public private partnerships or otherwise as well as removing administrative barriers to construction, with improvements in the licensing of projects. The OECD calls for clear rules "allowing landlords to recover costs from upgrading dwellings would also boost energy renovations, especially if combined with financial support to mitigate cost pressures on tenants". [3]

Notwithstanding the ongoing crisis, the Bank of Portugal forecasts a 5.9% rise in residential investment, which is expected to contribute to growth in the bank lending sector.

2.2. Financial markets

2.2.1. Portuguese Stock market

The Euronext Lisbon's benchmark PSI index (formerly PSI?20) closed 2025 with a price gain of approximately 29.5%, ending at 8,263.65 on 31 December 2025, and reached new 16?year highs above 8,500 points in early January 2026.

In total?return terms (including dividends), the PSI advanced about 27.4% in 2025, outperforming several major global benchmarks such as the S&P 500 and STOXX Europe 600, as well as European markets including the DAX (Frankfurt), FTSE 100 (London) and CAC 40 (Paris), while trailing the FTSE MIB (Milan), as well as the IBEX 35 (Madrid), which recorded one of the strongest gains among large European indices at close to 49% in 2025.

The Portuguese stock market is mainly composed of defensive-sector industries such as energy, banking and paper industries. The largest companies on Euronext Lisbon's benchmark PSI index include:

• EDP - Energias de Portugal S.A. (EDP.LS). The index’s largest constituent registered an increase in electricity production in 2025 supported by favourable hydro conditions and its renewable operations. The shares produced a positive double?digit return (around 20%) over the year, with market capitalisation around €16 billion at the end of the year.[4]
• BCP - Banco Comercial Português S.A. (BCP.LS). Benefitting from higher profitability and ongoing balance?sheet strengthening, the share price rose by about 93% in 2025, reaching multi?year highs. Market capitalisation stood in the low?teens billions of euros, around €13.2 billion depending on the specific closing date used.[5]
• Jerónimo Martins SGPS S.A. (JMT.LS). A food retail group with core operations in Portugal and Poland. In 2025 the company posted record revenues of about €36 billion and achieved a share?price gain close to 9%, resulting in a market capitalisation of approximately €12.7 billion by year?end.[6]
• EDP Renováveis S.A. (EDPR.LS). A global wind and solar operator that reached approximately 20.4 GW of installed capacity in 2025. The shares recovered from 2024 lows and posted a high?teen to low?20% gain over the year, with market capitalisation close to €12.6 billion on an end?2025 basis.[7]
• Galp Energia SGPS S.A. (GALP.LS). Supported by a significant increase in Group EBITDA and upgraded production guidance, Galp’s market capitalisation stood slightly below €11 billion at the end of 2025.[8]
• Mota?Engil SGPS S.A. (EGL.LS). An engineering and construction group that reported record EBITDA, with growth around 15% and a substantial international and domestic order backlog. The share price increased by roughly the high?60% range over 2025, with market capitalisation near €1.5 billion at the end of the year.[9]
• Corticeira Amorim SGPS S.A. (COR.LS). A global leader in cork products. The company faced a year of pressure linked to changing alcohol consumption patterns and industrial deleveraging, finishing 2025 with a decline in its share price and a market capitalisation of around €0.9 billion (as of late 2025).[10]
• Altri SGPS S.A. (ALTR.LS). An industrial producer of cellulosic fibres. The company experienced weaker performance in the second half of 2025 amid softer global demand, ending the year with a negative share?price performance and a market capitalisation of approximately €0.9 billion (figure dependent on reference date).[11]

2.2.2. Debt capital markets (DCM) & bond issuances

The 2024–2025 period was characterised by high-profile corporate deleveraging and successful "Green Bond" entries.

(1) Corporate bond highlights

Notable corporate bond issuances in 2025 include:

• Santander Totta (Bank) – March 2025: Issued €400M in Floating Rate Covered Bonds due March 2028 to support mortgage-backed financing.
• CTT (Postal/Logistics) – April 2025: Issued €110M in Senior Unsecured Floating Rate Bonds due in 2031 to support general corporate growth.
• GamaLife (Insurance) – July 2025: Issued €125M in Tier 2 Subordinated Notes due 2035 at a 5.25% rate to optimise solvency capital.
• EDP (Energy) – November 2025: Issued €1,000M in European Green Notes to refinance existing higher-coupon debt.
• Banco CTT (Nov 2025). Priced a €45 million Senior Preferred Debt issuance (3.75% coupon) to meet MREL requirements and support retail credit growth.

(2) Public debt issuances

The following is a list of the main sovereign and regional bond issuances in 2025:

• Autonomous Region of Madeira (Regional) – June 2025: Issued €310M in 15-year Regional Bonds, backed by a central government guarantee, to refinance maturing debt.
• Republic of Portugal (Sovereign) – April 2025: Issued €1,047M via a dual-tranche auction of OT 3.875% 2030 and OT 4.1% 2037 to maintain liquidity in medium-term benchmarks.
• Republic of Portugal (Sovereign) – July 2025: Issued €1,260M in a dual-tranche auction focusing on the long end of the curve (OT 0.3% 2031 and OT 1% 2052).
• Republic of Portugal (Sovereign) – July 2025: Issued €612M in Floating Rate Treasury Bonds (OT FRN) maturing in 2031, a less frequent instrument used to diversify the investor base.
• Republic of Portugal (Sovereign) – September 2025: Issued €1,131M through an auction of OT 3% 2035 and OT 1.15% 2042 to address institutional demand for longer duration.
• Republic of Portugal (Sovereign) – September 2025: Issued €3,500M in 8-year Treasury Bonds (OT 2.875% 2033).
• Republic of Portugal (Sovereign) – September 2025: Issued €1,500M in 30-year Treasury Bonds (OT 2054) via syndication.

2.2.3. Portuguese equity markets dynamics

Despite the recent gains, Portugal’s equity market continues to face important challenges, including a sharp decline in the number of listed companies from a peak of 152 in 1990 to only 48 in 2025. Despite its modest size, the Portuguese equity market attracts yield-focused investors.

Market capitalisation in Portugal represented only 28.8% of GDP in 2024 and is projected to be around 25% to 30% in 2025, which is significantly lower than the European average (65% in 2023). This highlights a clear preference among Portuguese companies, particularly SMEs, for bank debt to the detriment of public markets, a preference which is often attributed to a culture of family control and insufficient scale of Portuguese businesses.

Initial public offerings are rare, with the last significant IPO in the Portuguese market being Greenvolt’s in 2021, subsequently acquired by KKR and delisted. Acquisitions of listed companies with international scale by foreign companies and private equities leading to delistings occur frequently.

2.2.4. Banking sector

During the first nine months of 2025, the five largest Portuguese banks reported aggregate profits of €3.903 billion, reflecting a 0.33% variation from the previous year and sustaining the sector's profitability.

Considering each bank individually, Caixa Geral de Depósitos reported a profit of €1.4 billion, Millennium BCP reported €775.9 million, Santander reported €728.2 million, Novo Banco reported €610.5 million, and BPI reported €389.3 million.

In 2025, the Portuguese banking sector was among the most profitable in Europe. The main Portuguese banks achieved a return on equity of 16%, exceeding the Eurozone average of 9.88% and ranking second in the Eurozone, behind Lithuania.

Non-performing loans declined to 2.3% in comparison to 2.4% in 2024 and 2.7% in 2023, following an earlier declining trend that is the result of stable economic conditions and significant improvements in banks financial governance and risk management practices.

2.2.5. Credit market

After reaching a peak in 2023 at approximately 4%, the 6-Month EURIBOR declined to about 2.63% in 2024 and further to approximately 2.15% by December 2025. The 3-month EURIBOR started the year of 2025 above 2.7%, falling to 2.0% over the year.

For 2026, the Bank of Portugal forecasts an additional decline, with the 3-month EURIBOR stabilizing at around 2% fuelling the 9.8% increase in housing loans in 2025 compared to the previous year.

Credit granted to companies and individuals has also increased. According to a November report from the Bank of Portugal, credit granted to companies has risen by 4.3% in annual terms, while consumer credit granted to individuals has risen by 7.9%.

2.2.6. Non-Financial Sector companies’ debt

In 2025, the debt of non?financial private companies in Portugal reached €308 billion, representing an increase from the €299 billion low of 2023. This €308 billion represents the highest nominal level recorded in the 2016-2025 period.

According to statistics published by the Bank of Portugal, the stock of private corporate debt expanded at an annual rate of around 2.5% through the third quarter of 2025, based on total credit to resident non?financial corporations (loans and debt securities, domestic and external). This increase was supported both by lending from resident financial institutions and by external financing.

Despite the higher outstanding amounts across the system, the aggregate NPL ratio for banks in Portugal remained low, standing at about 2.3% in Q3?2025 (system?wide) albeit slightly.

3. Main events

3.1. Sale of Novo Banco

One of the most notable events of the year 2025 was the sale of Novo Banco, the fourth largest Portuguese bank, owned by the American fund Lone Star and the Portuguese Resolution Fund, the banking resilience fund created to support ailing banks.

Founded in 2014 following the resolution of Banco Espírito Santo ("BES"), Novo Banco currently manages a retail network comprising 290 branches and serves 1.7 million customers, to whom it provides services such as deposits, loans, insurance, among others.

Since its foundation, the bank has shown remarkable progress, having transformed into a highly profitable entity. In 2024, the bank recorded:

• €42.4 billion in total assets.
• €37.3 billion in liabilities.
• EBITDA of €200 million.
• Net profit of €744.6 million.

After indicating a stock market listing through an initial public offering of approximately 25% to 30% of the capital, Lone Star opted for a direct sale of Novo Banco to the French group BPCE for 6.4 billion euros, announced in June 2025, with completion expected in 2026.

With a small presence in Portugal through Banco Primus, Oney, and Natixis, BPCE is presently the second largest banking group in France and one of the top ten European groups, with plans to expand outside France.

The distribution of the sale proceeds will be as follows:

• Lone Star: €4.8 billion.
• State + Resolution Fund: €1.6 billion.

Lone Star Funds will obtain a significant financial return from the sale. The Portuguese State, which, together with the Resolution Fund, owns the remaining 25%, despite a partial recovery of funds, will record a net loss of approximately 6 billion euros.

This transaction represents the largest cross-border operation in the Eurozone over the last 10 years and represents a growth opportunity for BPCE, given that Novo Banco holds a market share of 9% in individual customers and 14% in businesses.

3.2. Privatisation of TAP

In August, the Portuguese Government approved the first phase of the privatisation of TAP – Transportes Aéreos Portugueses, S.A. ("TAP"), Portugal’s flag carrier, with the publication of Decree-Law 92/2025 and the approval of the tender documents.

Decree-Law 92/2025, the Government has authorised the sale of up to 49.9% of TAP’s share capital, with the State retaining at least 50.1%.

The minority stake will be split between a strategic investor (or a consortium of investors), who will acquire up to 44.9%, and up and the TAP Group employees, who will have the option to acquire up to 5%. If the employees do not acquire the full 5%, the remaining shares will be sold to the selected investor.

The primary objectives of TAP's reprivatisation include maximising the recovery of public funds invested in TAP, enhancing the airline’s brand and market position, and ensuring connectivity to key destinations, particularly those with historical, cultural, and social ties to Portugal.

Potential investors must satisfy certain participation requirements, including fit and proper status, financial capacity, certified air operator status, size, and such other conditions established in the tender documents (caderno de encargos).

The sale process will include the following stages:

• Expression of interest: interested parties must submit their expression of interest within the timeframe specified in the tender documents.
• Screening: the Government will assess whether the interested parties meet the participation requirements.
• Non-binding proposals: interested parties will submit indicative (non-binding) offers, after which selected bidders may be invited to submit binding proposals.
• Binding proposals: selected bidders will submit binding offers, following which the contract will be awarded or the bidders may be invited to a negotiation phase (if applicable).
• Negotiation: the Government will negotiate with the selected bidders, who will be asked to submit their best and final binding offers.

The sale process is expected to be completed by the third quarter of 2026, with the pre-qualification phase already concluded, determining that all interested parties (Air France-KLM, IAG, and Lufthansa) meet the requirements to proceed to the second phase, which began on January 2 and sets April 2, 2026, as the deadline for the submission of non-binding proposals.

The evaluation criteria for the proposals prioritised the industrial plan, fleet growth, the development of national airport infrastructure, investment in sustainable fuels, and the financial amount injected into the company, with central issues being the maintenance of the hub in Lisbon and the national identity of TAP.

The sale agreement grants the private investor management of the company, which will, however, be subject to a state veto right on strategic matters, ensured through a shareholders' agreement. Furthermore, the specifications document, approved in September, stipulates reciprocal pre-emption rights in the future sale of stakes in TAP, as well as a tag along right for the investor in the event of the sale of the State's stakes to a third party.

Despite the potential advantages of the private management model with predominantly public capital, significant risks arise, such as the need to establish mechanisms to safeguard the investor's return in case they intend to make significant investments.

In addition to this, the risk of nationalisation of losses and political interference in management persists, which generates conflicts of interest, as observed in cases like Portugal Telecom, potentially requiring compensations or put options for private investors.

3.3. The new Lisbon airport

After extensive discussions regarding possible locations for the new Lisbon airport, the Government requested ANA – Aeroportos de Portugal to plan and develop a new airport in Alcochete, intended to replace the current Humberto Delgado Airport.

The choice of Alcochete was based on a study conducted by an independent technical committee, which valued its proximity to the capital and the ease of connection to transport networks. The assignment of the project to ANA aligns with the concession contract, entered into in 2012, which assigns the concessionaire the responsibility for building a new airport, a condition that was essential for its privatisation and acquisition by VINCI, a French infrastructure company.

ANA submitted an initial report in December 2024, with financial and technical projections, followed by amendments submitted in July 2025. The proposal includes the construction of two runways, with the option to expand to four, and an installed capacity for 45 million passengers, ten million more than the capacity of the current infrastructure.

Although the initial cost was estimated at 8.5 billion euros, higher than the initial projections of the technical committee, the amendments submitted in July aim to optimise this amount by reducing the length of the runways (from 4,000 meters to a length equal to or greater than 3,500 meters), decreasing the distance between them, and adapting to specificities related to low-cost airlines.

It is estimated that the construction period will last six years, with the start of works following the obtaining of licenses and agreements, and operations are expected to begin in mid-2037, with the possibility of an earlier start by the end of 2036.

Regarding the financial model, the proposal excludes direct contributions from the State, relying on a gradual increase in airport fees between 2026 and 2030, indexed to inflation, and on the extension of the 30-year concession contract by an additional 30 years, until 2092.

In parallel, to safeguard the viability of the project, the Council of Ministers recently approved measures to limit urban interventions in the area of the future airport. The objective is to prevent cost increases in the expropriation process and to ensure that the chosen territory does not undergo changes that could jeopardised the project.

Regarding the next steps, ANA is expected to submit an environmental report by the end of January, and the detailed construction proposal from ANA should be completed within a period of 36 months from January 2025. The Government clarified, however, that while the new airport is not built, there will continue to be significant investments in the modernisation of the current airport, including an ongoing investment of 320 million euros for the modernisation and expansion of the boarding terminals.

3.4. Sale of Secil by Semapa

Semapa, a Portuguese investment holding company, announced in December 2025 an agreement for the sale of the entire capital of Secil, one of the leading Portuguese companies in the cement sector, to the Spanish company Cementos Molins for a value of 1.4 billion euros.

The transaction, which includes the cement company with an annual production capacity of approximately 10 million tons of cement, and which operates eight factories across four continents, represents one of the largest transactions in the Portuguese industrial sector in recent years.

The announcement of the transaction, which, according to analysts, was carried out at an implied multiple of 7.5 times EBITDA, triggered a sharp rise in the shares of the Portuguese holding company, which soared to their highest levels since 2018. The operation is also significant in that, with this sale to the Spanish group, the highly concentrated Portuguese cement market will now be predominantly controlled by international groups:

• Cimpor: responsible for approximately 58% to 60% of the market share, owned by the Asian group Taiwan Cement Corporation;
• Secil: responsible for over 35% of the market share, owned by the Spanish group Cementos Molins;
• Other producers: responsible for a residual market share, still controlled by national companies.

Despite the control of the company passing to the Spanish group, the expectation is that, according to the announcement by the CEO of Molins, the 2,900 workers currently employed by Secil will continue to be part of the company's structure.

3.5. High-Speed train Lisbon-Porto

The high-speed line will connect the two most important metropolitan areas of the country, Lisbon and Porto. This project, one of the largest to take place in the country during this century, alongside the construction of the new Lisbon airport, will be built in phases. The first phase includes the sections from Porto to Oiã and from Oiã to Soure, with completion of the works expected in the early years of the next decade.

3.5.1. Porto-Oiã section

On July 29, 2025, the concession contract for the construction and maintenance of the first section (Porto-Oiã) of the high-speed railway line connecting Lisbon and Porto, the two most important cities in the country, in approximately 1 hour and 15 minutes, was signed. This contract is part of the first phase of the project, has a term of 30 years, and construction is expected to take place between 2026 and 2030.

The concession was awarded to the company Avan Norte – Gestão da Ferrovia de Alta Velocidade, established by the LusoLAV consortium, with the European Investment Bank having contracted a financing of 875 million euros with the company for the construction of the first section.

This financing constitutes the first tranche of a total package of 3 billion euros approved in 2024 to fund the implementation of the entire infrastructure, making this financing the largest contract signed under the European Union's InvestEU program.

Although the start of the works is scheduled for January 2026, in December 2025, the Portuguese Environment Agency ("APA") rejected the project, as proposed changes, according to the agency, deviate from the preliminary study that served as the basis for issuing the environmental impact statement. In this regard, the start of construction will be delayed by at least 72 days.

3.5.2. Oiã-Soure Section

In December 2025, the relaunch of the tender for the concession of the high-speed line section connecting Oiã to Soure was announced, which constitutes the second and final segment of phase 1 of the project.

The relaunch of the tender follows the termination of the tender procedure launched in July 2024 due to the absence of valid proposals. The relaunch of the tender includes an extension of the works 11 kilometres shorter than presented in the previous tender, but maintains the price, with the construction of this section expected to take place between 2027 and 2032.

4. Main legal and regulatory developments

4.1. Overview

The main legislative developments in the Portuguese financial sector in 2025 included (i) amendments to the banking resolution regime through Decree-Law 14/2025, of 17 March 2025 ("2025 RGIC Amendment"), (ii) a new framework for the assignment and management of banking credits, and (iii) the designation of the national competent authorities with supervisory duties and sanctioning powers in relation to crypto-assets.

4.2. Amendments to the credit institutions and financial companies law

The main 2025 RGIC Amendment introduced changes to the Portuguese Banking Law (Regime Geral das Instituições de Crédito e Sociedades Financeiras, originally established by Decree-Law 298/92, of 31 December 1992 ("RGIC"):

• aligning the Portuguese bank resolution framework with Regulation (EU) 2020/2223 of the European Parliament and of the Council of 23 December 2020, Regulation (EU) 2022/2036 of the European Parliament and of the Council of 19 October 2022 and Directive (EU) 2024/1174 of the European Parliament and of the Council of 24 April 2024 amending the Bank Resolution Directive ("BRRD Amendment"), and
• authorising the Bank of Portugal to disclose information contained in databases, subject to banking secrecy, to the European Anti-Fraud Office ("OLAF"), in accordance with Regulation (EU, Euratom) 883/2013.

The 2025 RGIC Amendment changes to the banking resolution regime include a new definition of "liquidation entities" (i.e. entities that are expected to be wound up under a resolution plan) exempting them from complying with the minimum requirement for own funds and eligible liabilities ("MREL").

As a safeguard against insufficient internal loss-absorbing capacity, the 2025 RGIC Amendment allows the Bank of Portugal to impose a minimum amount of own funds and eligible liabilities exceeding the amount necessary to absorb losses, which the entity must meet through one or more of the following elements:

• own funds;
• claims that meet the eligibility criteria; and
• claims arising from debt instruments.

The 2025 RGIC Amendment further allows the Bank of Portugal to apply the own funds requirement on a consolidated basis to a "subsidiary" — and no longer solely to the parent company — if certain conditions are met, namely that the subsidiary is directly owned by the resolution entity. In this case, and for the purpose of complying with the requirement, the 2025 RGIC Amendment recognises the eligibility of claims issued or contracted in favour of the resolution entity belonging to the same resolution group and subscribed by it, as well as the claims issued or contracted in favour of shareholders of the entity in question who do not belong to the same resolution group.

4.3. New rules on the assignement of banking credits

Decree-Law 103/2025, of 11 September 2025, approved a new Legal Framework of the Assignment and Management of Banking Credits (Regime da Cessão e Gestão de Créditos Bancários, "RCGCB"), setting out the requirements on credit purchasers and credit servicers, and updates the regulatory framework of the Central Credit Registrar ("CRC").

Among the main innovations, the RCGCB establishes the possibility of assigning credits to other entities other than those already authorised for this purpose in respect of credit agreements that (i) have loans with instalments overdue for more than 90 days, or (ii) have been classified as unlikely to be repaid, within the meaning of Regulation (EU) 575/2013 of 26 June 2013, for at least 12 months, where the debtor is a small, medium-sized, or large enterprise.

Regarding companies, the RCGCB clarifies that the assignment does not depend on the debtor's consent, but requires prior notice to produce effects, ensuring that the debtor is duly informed of the assignment.

Another relevant aspect is the obligation for assignees to contract an authorised entity to manage the credits, unless the assignee itself is an authorised entity.

With regard to the protection of debtors, credit servicers are subject to several obligations, namely the duty to provide clear and timely information to debtors, to comply with fair conduct standards, and to respect professional secrecy, equivalent to banking secrecy. Likewise, the assignee becomes bound by the same legal obligations as the assigning institution, particularly with regard to consumer protection legislation. Thus, the contractual terms and the rights of debtors, such as early repayment or renegotiation of terms, remain unchanged, regardless of who holds the credit.

Regarding supervision and the sanctioning regime, the Bank of Portugal now has the authority to oversee and supervise, issue determinations, carry out inspections, and impose sanctions in case of non-compliance. Such sanctions may range from substantial fines to measures such as the revocation of authorisations or the disqualification from performing certain functions. This sanctioning framework applies to institutions, assignees, and credit servicers who fail to comply with the established rules.

Lastly, Decree-Law 103/2025 also introduces a new regime applicable to the CRC, managed by the Bank of Portugal. Among other changes, it is noteworthy that the entities participating in the CRC will now include, in addition to those currently defined, credit servicers, who will thus be required to regularly report information on credit liabilities, including financial and risk data.

4.4. Mica regulation

Following the approval, in 2024, MiCA, which regulates the European crypto-asset market, the European Commission published a set of Delegated Regulations that complement MiCA in 2025, introducing rules on complaint management, advisory supervisory colleges, business continuity plans, and reporting obligations, among other matters.

The MiCA regulation establishes requirements for the public offering and admission to trading of crypto-assets, as well as obligations for service providers, including the need for authorisation by a competent authority.

The delegated regulations approved in 2025 include:

• Delegated Regulation 2025/292 that establishes a template for cooperation agreements between the EU competent authorities and supervisory authorities of third countries. The objective of this regulation is to promote the exchange of information and strengthen the oversight of the crypto-asset market.
• Delegated Regulation 2025/293 and Delegated Regulation 2025/294 establishing standardised complaint handling procedures for issuers of asset-referenced crypto-assets (Regulation 2025/293) and for crypto-asset service providers (Regulation 2025/294).
• Delegated Regulation 2025/296, which establishes more detailed rules for the approval process of white papers, ensuring a complete and efficient assessment of crypto-assets, while Delegated Regulation 2025/297 establishes the conditions for the creation and operation of advisory supervisory colleges, established, managed, and chaired by the European Banking Authority ("EBA") for each large-scale cryptocurrency.
• Delegated Regulation 2025/297, which establishes the conditions for the creation and operation of advisory supervisory colleges, established, managed, and chaired by the EBA for each large-scale cryptocurrency.
• Delegated Regulation 2025/298 specifying the methodology for estimating the quarterly average number and the daily average aggregate value of crypto-asset transactions.
• Delegated Regulation 2025/299 imposing on crypto-asset service providers the obligation create and test business continuity plans annually. These plans must enable the provider to respond to incidents and resume their services.
• Delegated Regulation 2025/303 and Delegated Regulation 2025/304, which contain a set of information that must be provided to the competent authorities by entities wishing to provide crypto-asset services, as well as the respective notification procedure.

These new regulations bring significant changes to the crypto-asset market, ensuring greater transparency and security in digital asset operations. Credit institutions and crypto-asset service providers must pay close attention to this set of new rules, which now regulate the digital assets market in detail.

These regulations came into force in Portugal in March 2025, with a transitional regime of 18 months, for entities already registered with the Bank of Portugal under previous legislation, which will be able to continue their operations until July 1, 2026, or until authorisation is granted or denied under the terms of Article 63 of the MiCA Regulation.

New operators will require an authorisation, which, at the time of the issuance of these regulations, was not possible due to the absence of a designated competent authority. The Bank of Portugal has clarified that entities that have not started their activity by 30 December 2024 are prohibited from operating until they obtain authorisation, and those already authorised must comply with the new rules during the transitional regime.

4.5. National crypto-assets legislation

Law 69/2025, of 15 April 2025, appointed the Bank of Portugal and the Securities Commission (Comissão do Mercado de Valores Mobiliários, "CMVM") as the Portuguese competent authorities for the purposes of MiCA.

The supervisory responsibilities are distributed as follows:

(1) Bank of Portugal

• Authorisation of service providers;
• Acquisition of cryptoasset service providers;
• Matters related to asset-referenced tokens and electronic money tokens; and
• Prudential requirements, governance mechanisms of cryptoasset service providers, and outsourcing and orderly winding-up of cryptoasset service providers.

(2) CMVM

• Prevention and prohibition of market abuse related to crypto-assets;
• Supervision of public offerings and admission to trading of crypto-assets that are not asset-referenced tokens and electronic money tokens;
• Supervision of compliance with obligations applicable to all cryptoasset service providers; and
• Supervision of compliance with obligations related to specific cryptoasset services.

Law 69/2025 mandates the Bank of Portugal and CMVM, as the national competent authorities, to cooperate with each other by exchanging information for the purposes of coordination, in order to address any supervisory inconsistencies and enable the authorisation of new operators following article 93 of MiCA, which requires competent authorities the same duties with a view to ensure consistent and effective supervision across Member States.

Service providers must ensure their employees providing consultancy have adequate knowledge and skills, assessed annually, and make documentation available to the CMVM upon request. Furthermore, apparently, they must provide a complaints book.

Law 69/2025 also establishes a sanctioning regime that provides for serious and very serious administrative offenses, with fines of up to five million euros for legal entities, determined based on turnover or benefits obtained. These administrative offenses include violations such as unauthorised offers, market abuse, and non-compliance with reporting obligations.

Ancillary sanctions are also established and include situations such as the prohibition from performing functions for up to 10 years.

Lastly, the law provides for consumer protection measures, introducing the possibility of public interest actions for crypto-assets holders. Furthermore, it imposes on issuers and service providers the obligation to offer access to alternative and effective dispute resolution mechanisms, therefore recommending adherence to mediation entities and the review of contracts with clients to include refund and transparency clauses.

5. 2026 Outlook

Looking ahead into 2026, several uncertainties loom over Portugal's economic growth and political stability while acceleration in AI investments could reach Portugal and contribute positively to the national economy.

The following are our views on the main issues affecting Portugal in 2026:

• Misalignment in the western world. As the EU and the US drift apart and shared values no longer assure economic cooperation, Europe will face the need to moderate its legislative impetus and adopt a business-minded approach to address geopolitical tensions and its 20-year-long period of slow economic growth.

The deepening misalignment between Europe and the US is not due entirely from Trump's rise to power, but from the slow and gradual divergence of the two continents in critical policy areas, as well as on the public and. private sector's roles in tech development.

Europe's lag behind the US and China in artificial intelligence represents the culmination of over 30 years of low investment in technology, over-reliance on US tech offerings, and the wrong belief that EU institutions and national states should take a leading role in fostering innovation for which they are ill-prepared.

The EU must face the fact that only independent and creative private initiative, operating in a market-oriented economy, can lead to significant advances in technology.

• Portuguese economic and social imbalances will tend to worsen before they can improve. In the midst of these economic and geopolitical changes, Portugal faces its own structural problems, resulting from more than ten years without making any significant effort to attract foreign investment at scale.

We do not expect significant changes in Portuguese policies, but only slight improvements resulting from a more business-friendly approach, as evidenced in the recent announcements of the reduction in corporate taxes, the desire to create an AI infrastructure and the reforms in various administrative procedures.

• Difficulties for a minority government to push for reforms and sustain social and political pressure. The Portuguesegovernment has to deal with the challenge of making reforms without knowing if it will stay in office for the duration of the current election term.

Several small changes have been made that may yield positive results, such as the recently approved AI agenda and the announcement of Microsoft's investments in a Portuguese data centre.

Despite the government's efforts, deep structural issues hamper the judicial system, administrative decisions and healthcare. Tax pressure on middle class families is now perceived by all as burdening their present and future disposable income expectations. Tax reductions are not well received by many and the pressure from ever-growing social costs makes it difficult to bring about significant changes.

The government’s plan to further reduce corporate income tax can result in more domestic and international investment, but the need to reduce personal income tax and social security contributions is now obvious.

• Housing prices will continue to increase until the gap with Spain and other southern European economies is softened. Housing prices will continue to increase in 2026 and until a worldwide shift in prices spills over to Portuguese assets.

The fact that the housing crisis affects many Western countries shows that it is unlikely that local governments can do much to reverse the trend. Only massive investment in social housing, aligned with a more predictable and streamlined licensing process, could have a significant impact on the housing market.

The Portuguese government has introduced several legislative changes aimed at facilitating the construction of new homes, which will have a positive impact on the sector, but it will take several years for the benefits of these changes to be felt on the ground.

• Banks will continue holding strong balance sheets. Banks operating in Portugal have built sufficient strength to fight an economic downturn and to continue funding the economy.

Increases in house prices are contributing to the banks' present strength, as the value of their mortgage portfolios also increases and non-performing mortgages can be realised with fewer losses.

Following Portugal's sovereign debt crisis of 2010, which was followed by a surge in bank non-performing assets, domestic banks turned around their money allocation strategy, implemented stronger compliance and financial governance mechanisms, putting them in an ideal position to benefit from Portugal's mild economic growth over the last 10 years.

We expect banks will continue to navigate smooth waters but will face increasing competition within the local market and from fintech providers as Portuguese consumers and bank clients start to favour tech solutions over old-school banking.

• AI usage will deepen and start affecting various business sectors. Following the rapid adoption of consumer AI solutions like ChatGPT, knowledge professions, including financial advisors and banks, will incorporate AI into their business processes.

Despite present solutions being still far from the desired results due to their chat-like format, B2B AI-powered solutions will emerge and affect all business sectors. Programming is in the first wave of the AI tech revolution, with all major LLMs deeply investing in real-life programming applications.

Marketing, finance and law, presently using general models or wrapper B2B solutions, will be the next sectors to be affected. We expect to continue seeing more first-wave AI solutions in 2026, with no player achieving dominance in the respective sectors.

Banks and other financial companies are now at a crossroads: investing in proprietary novel solutions that require significant investment and deep internal cultural changes or viewing AI as a product that can be purchased off-the-shelf.

• Heavy investments in AI infrastructure will impact positively on Europe and Portugal. As developments in AI advance and consumer and business adoption accelerate, we expect that investments in data centres and other AI related infrastructure will contribute to Portugal's economic growth.

As AI compute needs increase so does the need for data centres. Demand is now led by hyperscalers, but geopolitical tensions, regulatory pressure and technical developments, such as edge computing, are pushing for data centres of different scales to be built in Europe.

Portugal can capitalise on its advantages for the development of data centres, including its proximity to key submarine communication cables linking Europe, Africa, and the Americas, installed renewable energy capacity (from onshore and offshore wind and solar) and favourable conditions for the development of green energy projects.

INTRODUCTION

This paper provides an overview of the main aspects of drafting and negotiating loan agreements, taking as reference MACEDO VITORINO's standard loan agreement, the LMA standards and the documentation employed by national and international banks. This paper builds on our earlier works, "Dealing with Portuguese Borrowers" (1997) and "Lending in Portugal in the aftermath of the Banking Crisis" (2010), which examined how common law concepts from international markets gained acceptance and became standard practice in Portugal.

The object of this paper is to review some of the most important aspects of dealing with Portuguese borrowers in international loan agreements.

In addition to using their standard form agreements, most lenders will seek a legal opinion from a reputable national law firm confirming, in general terms, that the borrower has the capacity to enter into the specific agreement and that its provisions are enforceable in Portugal. This serves to provide assurance regarding the agreement’s enforceability. Such an opinion is typically sufficient to address lenders’ concerns related to the borrower’s nationality.

However, when dealing in a different jurisdiction the lender should take the necessary time to understand the local regulations and the key concepts that could ultimately affect the loan. Some provisions may be interpreted differently by a Portuguese court and may not withstand the public order judgement if the lender attempts to seize the borrower’s assets located in Portugal.

In addition, Portuguese law will apply to the enforcement of security agreements where the collateral is subject to Portuguese law, as will be the case of mortgages over real estate, pledges of securities issued by Portuguese companies or pledges of assets located in Portugal.

The recent evolution of financing contracts has led to the use of increasingly complex contracts, often unfamiliar to the Portuguese legal framework, causing significant challenges for both lenders and borrowers.

Portuguese banks are increasingly using contracts derived from common law precedents, which are more difficult to interpret under Portuguese law, rarely addressed by legal scholars, and adopt solutions that can be questionable in certain cases.

For instance, asset protection mechanisms, such as cross-default clauses, negative pledge or no-pledge clauses, and clauses requiring that credit be maintained on a pari passu basis, have become commonplace.

Our experience indicates that, in many contracts, English law concepts are adopted without critical examination of their legal implications or the potential challenges they may face in court.

We have observed that internal departments of certain banks are now using drafts better adapted to the Portuguese legal framework, having removed clauses that could pose more significant issues. Generally, adaptation of precedents to Portuguese law is more frequent in corporate finance and loans for acquiring real estate or other assets, compared to leveraged buyouts (LBOs) or project finance contracts.

In some cases, this is due to the involvement of foreign banks and investors in project finance and leveraged buyouts (LBOs), who often favour the use of common law templates, making limited adjustments and only when aware of the risks associated with unsuitable standard drafts.

This paper examines the key elements of Portuguese law that influence how lenders and borrowers should approach transactions involving Portuguese borrowers, guarantors or assets located in Portugal.

2. GENERAL ASPECTS

2.1. ISSUES FOR LENDERS

When deciding to provide lending in Portugal, lenders should take into consideration some key legal issues.

In recent years, we have seen a trend toward the standardisation of legal documents. Generally, standardised documentation expedites the negotiation process, offers a common framework that facilitates the translation of agreed commercial terms into the legal documentation and minimises disputes over boilerplate provisions. However, as lenders and borrowers become more accustomed to such standardized templates, there is a risk that they may rely on documents that fail to address emerging risks or do not cover them in the most appropriate manner.

This is particularly significant for Portuguese legal documentation, which is often based on English law precedents and may not always be suited to deal with various Portuguese legal and commercial issues.

An example of a market standard that would likely fail if put to test is the call option over shares of project companies, used in many Portuguese project financing transactions. While this mechanism is widely accepted in English law transactions, it could be disputed by a defaulting borrower based on the general prohibition on lenders foreclosing (pacto comissório), as foreclosure of securities is only allowed under financial or commercial pledge arrangements.

We have also seen that, in several Portuguese transactions, lenders, often relying on standard legal opinions, many times do not conduct a thorough due diligence on critical Portuguese law matters that could affect their rights, such as the capacity of their counterparties to grant securities, financial assistance restrictions, the definition of default, the enforceability of certain events of default and the consequences of the insolvency of the borrower or the security provider.

Naturally, for Portuguese lawyers working on transactions with Portuguese counterparties, it may not always be possible to provide lenders with a definitive opinion on certain Portuguese law matters, particularly in the absence of legal precedents to evaluate the associated risks.

In any case, lenders should generally obtain a more in-depth advice on the Portuguese law aspects of the transaction, particularly on how these aspects may affect their position in distressed scenarios, such as the default or the insolvency of the borrower.

Summing up, international and domestic lenders should review and consider:

• the legal framework governing the borrower and its business;
• the enforceability of the documentation (whether it is governed by Portuguese or English law);
• the capacity issues that may arise, in particular those that may affect the borrower’s and/or guarantor’s ability to give security;
• manners in which transactions can be refinanced or the borrower restructured out of court; and
• Portuguese insolvency law and its impact on a refinancing of the transaction or in the restructuring (in or out of court) of the borrower.

2.2. ISSUES FOR BORROWERS

After the financial crisis, Portuguese borrowers saw an increase in the cost of funding from banks, as banks were no longer comfortable with the levels of leverage of certain businesses which were acceptable before the financial crisis.

As a result, it became more difficult for borrowers to obtain the same level of funding without improving their capitalisation, which meant that corporations had to add more equity before they got bank funding. Although domestic banks are now in a much more comfortable position, they still require lower leverage levels.

Presently, when dealing with international and domestic lenders, Portuguese borrowers should:

• understand the cost of funding and capital requirements for the lenders involved in the transaction;
• negotiate realistic financial and information covenants as well as default clauses, as lenders may not be in a position to waive defaults if they occur;
• review any capacity issues that may arise, in particular those that may affect their and/or their guarantors’ ability to give security;
• review the implications of a default; and
• prepare for distress situations where they might need to refinance the loan or even restructure their business.

2.3. CAPACITY ISSUES

When dealing with a Portuguese borrower, lenders should carefully assess the capacity of the borrower to enter into financing transactions and of guarantors to provide personal guarantees or securities. Although this is often regarded as a minor concern, since most legal entities generally possess the capacity to engage in commercial agreements, including financing and security arrangements, this matter deserves careful attention.

Certain entities, including public authorities, public undertakings, and even private companies, are subject to borrowing restrictions, particularly with regard to specific types of transactions (e.g., issuance of bonds, derivatives, etc.) that need to be assessed.

As a rule, the financing of public authorities or public undertakings is subject to budget limitations and/or special authorisation procedures. State guarantees to secure financings to both public and private undertakings are also subject to special limitations and complex authorisation formalities.

When taking guarantees or securities, special care should be taken in case such guarantees or securities are granted not by the borrower but by companies related to the borrower (e.g. shareholders).

Under Portuguese law, a company may only grant personal guarantees or securities whenever (i) the guarantees/securities will secure the obligations of companies under a controlling or group relationship or (ii) the company has a corporate benefit in granting the securities. Lenders should take some assurances from the borrower, as the legal concept of “controlling or group relationship” has a defined legal meaning and the corporate benefit for the guarantor is sometimes difficult to demonstrate.

In addition to the general capacity issues, when financing a direct or indirect acquisition of Portuguese companies, lenders should also consider potential financial assistance issues.

Under Portuguese law, companies may not lend or otherwise provide funds or guarantees in order to allow another person or entity to subscribe or otherwise acquire its own shares. In case of breach of this limitation, the financing, guarantee or security will be voided.

3. THE LOAN AGREEMENT

Loan agreements have developed over the years into many standardised forms, which now are currently used by most foreign lenders when dealing with a Portuguese borrower.

In the course of our practice we have found many similar provisions, in relation to:

• conditions precedent, representations and warranties;
• covenants and undertakings, including the pari passu and negative pledge clauses; and
• events of default.

3.1. CONDITIONS PRECEDENT

Under a conditions precedent clause most agreements require that the borrower presents evidence of its capacity to enter into a particular transaction.

If the borrower is a State-owned company (typically a limited liability company majority owned by the State or a State holding) the company’s articles of association should be obtained as well as other constitutional documents, e.g. the decree-law determining the change in the company’s legal nature. All these documents should be checked to ascertain if any specific governmental approval is required to enter into financial agreements.

If the borrower is a public undertaking the lender should obtain copies of the borrower’s constitutional documents, as well as any amendments thereto, which are approved by specific decrees issued by the Government.

In these cases, the following measures should be taken:

• include a special covenant covering any changes in the borrower’s legal status ensuring that all changes to the company’s constitutional documents be notified to the lender and will not materially affect the company’s ability to repay the loan;
• include a special representation covering those cases where the change in the legal nature may be followed by either a merger or a demerger (such events should be treated as termination events);
• include a special warranty ensuring that the new entities will be responsible for the fulfilment of the obligations assumed under the agreement; and
• if the government has provided a guarantee to secure the loan, the lender should ensure that the guarantee would not be cancelled by the changes in the borrower’s legal nature (problems with anti-competition rules should also be considered).

3.2. REPRESENTATIONS AND WARRANTIES

Representations and warranties are generally statements made by a borrower for the benefit of the lender and relate to the borrower’s ability to comply with its obligations under the agreement and/or the validity of those obligations. Generally a warranty is a term of the contract while a representation is made prior to execution and inducing execution. However, practice has been narrowing the differences between representations and warranties; presently both serve the purpose of ensuring the lender that no material adversity affecting the borrower will jeopardise its ability to fulfil its obligations under the agreement. Materially all representations will be considered as warranties if they are to remain true throughout the loan.

Under Portuguese law there is no distinction between representations and warranties but very broadly it may be considered that while a representation, by virtue of inducing execution, would be taken as a “condition” upon which the lender based its decision to enter into the loan, a warranty, being a term of the contract itself, would be considered as an “obligation” of the borrower.

Therefore, some warranties such as those concerning the validity of the agreement or changes in the law, and in general all terms that are not within the borrower’s control, would not be enforceable in Portugal as warranties but as representations.

The practical impact of this distinction would be that no breach of representation would be considered a breach of contract unless proven that the borrower had willingly misrepresented certain events.

We recommend that loan agreements have different representations and warranties sections and that warranties be restricted to information within the borrower’s control prior and throughout the loan.

Even considering that the main function of these clauses is informative, a Portuguese borrower should not accept to warrant any information that it is not capable of maintaining after the execution of the loan. A way to avoid this problem is to establish that only the breach of any warranty with a material consequence may be considered a breach of contract. Except for 100% owned subsidiaries warranties related to the borrower’s affiliates should be avoided since they most probably would not be enforceable in Portugal.

From the lender’s standpoint it would be better to ensure that the borrower makes warranties that will remain accurate during the loan than to face a situation where the warranties may be declared null and void or unenforceable in Portugal on the grounds that they were not within its control.

In general, the warranties concerning (i) litigation, (ii) insurance, (iii) stamp duty and other taxes, as they exist upon the closing, (iv) subsidiaries as they exist upon the closing and (v) default would stand as such in a Portuguese court of law.

As to warranties regarding the borrower’s identity, it must be noted that in case of public undertakings the Government may decide to change the company’s structure and legal status and that the company would not control events such as the merger or demerger of the company. In those cases the lender should ask either to have the right to renegotiate and/or withdraw from the agreement or to have specific provisions ensuring that the new entities succeeding in the borrower’s obligations shall remain responsible for the loan.

Also in relation to State-owned companies with their liability limited by shares, the lender should obtain information as to the Government’s management power over the company. In certain cases the State may have retained a golden share in the company or the company may be going through a restructuring or privatisation process. To avoid the existence of a potential future breach of contract, the lender should ask for concrete financial information to the extent this may be either represented or warranted by the borrower.

If the borrower is a private company it may warrant that the list of its subsidiaries attached will not suffer any change that will materially affect its ability to fulfil its obligations.

3.3. CONVENANTS

The most important covenants in international lending to Portuguese borrowers have been:

• The restrictions on mergers and disposal of assets. Both these clauses are standard in foreign and national loans, but care should be taken when dealing with public undertakings because decisions concerning mergers and demergers are taken by the government by way of special decree-law. When the future of the borrower is uncertain the lender should procure to secure the loan by way of collateral instead of trying to have some degree of influence with regard to the management and operation of the borrower’s businesses. In relation to private companies standard restrictions on mergers and demergers or the disposal of assets as well as the monitoring of the borrower’s business usually prove to be sufficient;
• The «pari passu» and negative pledge covenants. Both these clauses are now standard in foreign loans and no major legal concerns would affect both their validity and enforceability in Portugal; the information provided by the borrower concerning its assets by way of representation and the «pari passu» covenant should be sufficient to reassure the lender that it will rank in effect equally with all present and future unsecured indebtedness. On the other hand, the negative pledge covenant will reassure the lender against the allotment of assets to a secured creditor and establish equality with other creditors of the same class;
• The restrictions on borrowings. This covenant may be used when a major loan is being made available. Sometimes the restrictions on borrowings will not prohibit borrowing altogether but trigger off an obligation to partially repay the loan in advance; and
• The information covenant. The information covenant completes the warranties concerning the company’s management and allows the lender to monitor the borrower’s capability to fulfil its obligations under the agreement.

Certain events such as mergers and spin-offs are within the borrower’s control, and it may undertake not to change the corporate structure and grant the lender the right to terminate the agreement upon the verification of any such event.

However, it must be noted that no covenant can be given that would bind a subsidiary of the borrower except for 100% owned subsidiaries or companies that have entered into a management and control agreement. Consolidation may have an impact on taxable profits, but it will not affect the company’s capacity to enter into agreements, and the parent company shall not be allowed to take decisions on behalf of its subsidiaries nor shall it be responsible for the agreements entered upon by its subsidiaries unless it is 100% owned.

3.4. TERMINATION EVENTS

Under standard loan agreements used by foreign lenders certain events are considered as events of default triggering the default provisions. Under Portuguese law an event may only be categorised as an event of default if it constitutes a breach of the loan agreement itself, such as inaccuracy of a warranty or failure to comply with a covenant. Other events, such as insolvency, which would be treated as anticipatory breaches under certain foreign jurisdictions because they might lead to the borrower being unable to comply with its payment obligations, would not be considered a breach under Portuguese law.

In general, we recommend foreign lenders to include provisions covering all “termination events” or “acceleration events”, including events of default and all other situations that would justify termination of the loan. However, a clear line should be drawn between the events that lead to the triggering of the default provisions and those leading to the termination or acceleration of the loan. The latter should never be subject to penalties since it would hardly stand the judgement of the Portuguese courts.

Typically, the following situations would be considered a breach of contract:

• failure to pay;
• breach of other obligations, other than payment obligations;
• repudiation;
• breach of covenants and undertakings; and
• misrepresentation.

These defaults give the lender the right both to terminate or accelerate the loan and to demand the repayment of all sums due under the contract, as well as to be indemnified for the damages the default might have caused.

If the loan agreement especially provides default interests, they would be due from the moment a default exists. In addition, if the borrower has given collateral to secure the loan, e.g. shares, these assets may be seized by the court to ensure repayment of the loan. Other security provided by the borrower, such as letters of credit issued on its behalf or bank guarantees provided to the lender, will also be triggered by the default.

However, other so-called events of default, which are meant to give the lender additional protection by triggering the same mechanisms as those put in place for default situations would not be considered as such by Portuguese courts and might be voided. Given the accessory nature of the security, such events of default would not be considered to trigger the enforcement of the security.

In order to ensure the same kind of protection, we would recommend foreign lenders to avoid categorising the following events as default:

• cross-default;
• bankruptcy, insolvency, creditors processes and liquidation;
• material adverse changes; and
• change in ownership.

These events should be construed as conditions to the survival of the loan upon their verification, e.g. the lender would have the right to terminate the agreement or accelerate the loan and be repaid of all sums due at that time, but would not seek to use the same remedies the law provides for default situations, such as the penalty interests or other damages for breach of contract.

In fact, the lender would obtain almost the same degree of protection as is provided by the standard form loan agreements, since upon the verification of the termination event it would be allowed to accelerate the debt. The borrower would then have to repay the loan and the interests due at that time. If it failed to do so, it would be in breach and the default provisions would apply as in ordinary default situations, triggering the enforcement of the security.

4. THE SECURITY AGREEMENT

4.1. FORMS OF SECURITY

As in most other jurisdictions, there are several forms of securities that a lender may resort under Portuguese law, e.g.:

• the mortgage (hipoteca);
• the pledge (penhor); or
• the assignment of proceeds (consignação de rendimentos).

The choice of the most suitable security in respect of the loan obligations must take into account the existing default risk, the nature and value of the borrower’s assets and its business activity as well as the purpose of the financing. In project financing, it is common practice to require securities over the whole project. They may be constituted through a pledge over the shares of the project company, a mortgage over the project facilities or a pledge over the business establishment. In standard corporate financing, it is more common to find pledges of securities and assets or mortgages over factories.

The nature of the security must also take into account the type of asset or right that is given to secure the borrower’s liabilities: security over real estate (so-called immoveable property) or moveable assets subject to registration may only be created by way of a mortgage, whereas security over other moveable assets must take the form of a pledge.

Portuguese law also allows the borrower to assign by way of “consignação de rendimentos” the proceeds of immoveable or moveable property subject to registration, as well as of the proceeds derived from registered debt instruments, but not other types of receivables.

4.2. THE MORTGAGE

The mortgage enables the lender to be paid with respect to the secured liabilities by the value of certain immoveable assets, or other assets treated as such, with preference in relation to the remaining common creditors.

Under Portuguese law, only the following assets and rights can be mortgaged:

• real estate;
• concessions over state property;
• right of usufruct over the assets and rights mentioned above (usufruto); and
• moveable assets subject to registration (ships, aircrafts and vehicles).

Mortgages must be created by way of public deed and registered before the relevant land or property registry office.

The main features of the mortgage’s legal framework are as follows:

• the mortgage is a charge over the mortgaged property as a whole, including any fixed parts thereof, but not over the proceeds generated by the mortgaged property;
• the mortgage secures both the payment of the borrower’s liabilities as well as other accessory obligations provided that the mortgage deed so specifies. The mortgage shall only secure the interests accrued during the three years prior to the enforcement of the mortgage;
• the mortgage shall continue to encumber the mortgaged property until the secured liabilities have been fully discharged. In the event the mortgagor sells the mortgaged property to a third party, the purchaser of the mortgaged property, who is not personally liable for the secured liabilities, has the right to redeem the mortgage provided that it either discharges the secured liabilities directly or undertakes to deliver to the creditors the proceeds of the sale up to the amount of the secured obligations;
• the borrower is not allowed to give non-disposal covenants. Any provision restricting the borrower’s ability to sell or further encumber the mortgaged property will be voided;
• the lender may demand the replacement or the reinforcement of the mortgage if the mortgaged property is destroyed or its value is no longer sufficient to cover the secured liabilities;
• the mortgage’s rank may be assigned accordingly with the rules of the assignment of credits provided that the mortgaged property might be separated from the borrower and the mortgaged property is not owned by third party; and
• the lender cannot foreclose the mortgaged property.

4.3. THE PLEDGE

The pledge enables the lender to be paid with respect to the secured liabilities by the value of certain assets or rights with preference before common creditors.
The pledge can be created over assets or rights that cannot be mortgaged, e.g.:

• moveable assets not subject to registration;
• shares in limited and unlimited liability companies; and
• debt receivables and other rights.

The main features of the pledge are the following:

• the pledge is a charge over the pledged asset as a whole including its proceeds and shall continue to encumber the pledged assets until the secured liability has been fully discharged; and
• the lender is not allowed to foreclose on the pledge. However the parties may agree that the lender may acquire the pledged assets in case of commercial and financial pledges and provided that the parties so agree in advance.

4.3.1. PLEDGE OF MOVEABLE ASSETS

The pledge of moveable assets requires:

• the delivery to the lender or an agent of the pledged asset or of a document that would entitle such lender or agent to exclusively dispose of the asset; or
• the joint possession of the pledged asset, provided that it prevents the borrower from disposing thereof.

In respect of commercial pledges, the law allows a symbolic delivery of the pledge through (i) registration in the books of a public agency where the assets are deposited, (ii) delivery of the title of transport in respect of the assets or (iii) endorsement of the title of deposit of the asset in a public warehouse. If the pledge is securing a liability towards a bank, the borrower does not need to transfer the possession of the pledged asset provided that the pledge deed is executed before a public notary.

While in control of the pledged asset, the lender is required to act as a bonus pater familia and may not dispose of the pledged asset without the borrower’s prior consent, except to the extent necessary to maintain the marketability and suitability of the asset or to enforce the pledge if allowed by the security agreement. The lender is also obligated to return the pledged asset upon the discharge of the secured liabilities.

4.3.2. PLEDGE OF CREDITS

When a credit is pledged, the relationship that is established between the pledgee and the obligor shall be subject to the same rules that apply to the assignment of credits. The creation of pledges over credit rights must comply with the formalities required for the assignment of the pledged rights.

As a rule, the enforceability of the pledge will depend on the notice of the debtor.
Unless otherwise provided in the security agreement, the debtor may only discharge the pledged credit to both the pledgor and the pledgee.

4.3.3. PLEDGE OF SHARES

The most effective type of security in Portugal, particularly in project and acquisition finance, is the pledge of shares, as it allows the lenders to effectively sell the entire business of the borrower, together with its authorisations, licenses and contracts.

Unlike other forms of security, such as the pledge of business establishments and assets or the assignment of credits, pledges of shares give pledgees direct access to the borrower’s entire business. If the lenders need to realise the pledge and sell the shares, the purchaser will be able to continue operating the company with minimum disruption of the business activity, whereas a sale of the borrower’s assets and assignment of its key contracts would present several difficulties.

However, if the parent company secures the obligations of its Portuguese subsidiary by way of a pledge of shares in the Portuguese company, the parent company will be subrogated in the lenders’ position against the company in the event the pledge is enforced. Consequently, the company, whose shares have been given as collateral, would not be sold debt free, thus reducing its value for a potential buyer. One way of solving this problem is limiting the parent company’s subrogation rights, but this solution may be challenged under the voidable preferences of the jurisdiction of the parent company or of the end borrower.

The creation of pledges over shares in private limited companies (sociedades por quotas) requires the registration of the pledge with the Commercial Registry Office.

The pledge of paperless shares in public limited liability companies (sociedades anónimas) must be registered in the account of the owner of the shares. When physical shares are being pledged, the pledge must be recorded in the share certificates and registered in the issuer’s share lodger or before the financial intermediary where the shares are deposited.

As a rule, the pledgor may continue to exercise the rights attached to the shares, unless otherwise agreed in the security agreement. It is implied by law as well as current market practice to accept that, for so long as no event of default has occurred, the pledgor may receive and retain all dividends, interest and other income deriving from and received by it in respect of the pledged shares as well as exercise the voting and other rights or powers attached to the shares.

However, a provision should be included in the security agreement allowing the pledgee, following the occurrence of an event of default, to receive all dividends, interest and other income forming part of the pledged shares to be paid to an interest bearing suspense account in the name of the pledgee, to be applied either to the fulfilment of the secured liabilities or to the creation of new securities. The pledgor should also have the right to exercise the voting rights of the shares in the event of default.

4.3.4. PLEDGE OF BUSINESS ESTABLISHMENTS

The pledge over the borrower’s business establishment (penhor de estabelecimento comercial) purports to create a charge over its entire business assets and contracts combining a pledge of rights (penhor de direitos) with a pledge of assets (penhor de coisas). The purpose of this type of pledge is to ensure that, upon the occurrence of an event of default, the lenders would be able to sell the whole business assets and assign the remaining contracts of the borrower to a third party.

The main risk of creating a pledge over the borrower’s business establishments is that this type of pledge may be deemed to create a floating charge, which is not recognised in Portugal, as pledge agreements must specify the assets that are charged. In addition, consent from key suppliers and clients to assign such contracts should be procured prior to taking the security. In other words, it is possible that a court would consider that only the assets and contracts that were expressly specified in the security agreement were actually charged.

In our view, it is possible to create a charge over the business establishment, but in order for such charge to become effective, care should be taken in ensuring that the security agreement includes a detailed and accurate list of the assets that are pledged to the lenders and of all contracts, licenses and authorisations that would be assigned in the event of a enforcement of the pledge.

Additionally, it is advisable that the lender perfects the pledge by requesting the obligor to specify the assets pertaining to the business establishment periodically.

The lender should also request the court to seize the business establishment upon the occurrence of an event of default and before insolvency proceedings are initiated to ensure its priority and avoid being treated as a common creditor with respect to the assets that are not mentioned in the pledge agreement, as under the new insolvency code, which is expected to be published soon, any securities given in the six months prior to the initiation of the insolvency proceedings shall be voided.

4.3.5. FINANCIAL PLEDGE OF SECURITIES

The financial pledge of securities is governed by Decree-Law 105/2004, dated 8 May 2004, which established the legal framework for financial collateral arrangements in Portugal (Financial Pledge Law), implementing Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002.

The Financial Pledge Law allows lenders, including banks and financial institutions, to enforce security interests over securities (such as shares, bonds, or cash) without court intervention, subject to specific conditions.

Financial collateral arrangements must comply with the following requirements:

• at least one of the parties must be a bank or a financial institution;
• the collateral must consist of cash or a financial instrument (such as shares or bonds);
• the secured obligations relate to payment duties or the obligation to deliver a financial instrument; and
• the collateral must actually be delivered to the collateral taker or be under its possession, and the arrangement should be recorded in a contract or deed.

The enforcement out of court may be used if the agreement clearly outlines both the process and the method for valuing the collateral.

The main advantage of the financial collateral is the protection upon insolvency of the collateral provider. In case of insolvency, financial pledges remain effective despite the opening of insolvency proceedings, and pledges perfected before insolvency are generally immune from clawback actions, save in case of fraud, while general pledges may be vulnerable to clawback.

4.4. ASSIGNMENT OF PROCEEDS

The assignment of proceeds (consignação de rendimentos) is a form of security over the proceeds of the following assets:

• real estate;
• moveable assets subject to registration (ships, aircrafts, vehicles and shares in a private limited company).

A public or private deed is required if the proceeds derive from immoveable or moveable property respectively. The charge must be registered with the competent property registry office.
The security agreement should detail if the assigned proceeds shall be used to pay the principal, the interest or both principal and interest, as well as who will hold the assets from which the proceeds originate.

The assets may be held by the borrower, by the lender or by a security agent. In case the assets are held by the borrower, the proceeds must be delivered to the lender or to a security agent.

The assignment of proceeds will be enforceable in accordance with the security agreement; no default or court order is required for the assignee to have title over the proceeds. Therefore, the security agreement should also detail whether the proceeds are to be immediately used for discharging the secured liabilities or be kept in a suspense account pledged to the lenders until the loan is fully discharged.

4.5. ENFORCEMENT OF THE SECURITY

There are two methods of enforcement of securities under Portuguese law: court sale (venda judicial) or private sale (venda extrajudicial).

In principle, securities shall be enforced by way of a court sale, which is the default enforcement procedure, if the security agreement does not expressly provide for a private sale. The resort to a private sale is only permitted for pledges. Mortgages must always be enforced by a court.

This represents an important disadvantage of mortgages in relation to pledges, as the court proceedings typically last over one year and may entail a significant devaluation of the mortgaged asset.

4.5.1. COURT SALE

The enforcement procedure in relation to mortgaged property and pledged assets is described in detail in the Portuguese Code of Civil Procedure.

Once a request to start enforcement is filed, the chargor will be requested to pay within ten days or to oppose to the enforcement, which it may only do if the charge is invalid or the chargee was not entitled to enforce the security. If it fails to do so, the court will issue a distraint order and seize the security. The chargor will also have the right or the obligation to offer other assets in lieu of the security to discharge the secured obligations.

There are three forms of court led sale procedures:

• sale by a court bailiff, which can be made by way of an open auction or by way of sealed bids;
• sale by private negotiation, which shall be applicable following a proposal by the charger or the debtor or in the event the sale by way of sealed bids fails; and
• sale of the pledged asset in an exchange where such assets are or may be traded.

To enforce the pledge in court the lenders must possess an enforceable title (título executivo), which may consist of a public deed, authenticated document or ruling that creates or acknowledges the debt.

4.5.2. PRIVATE SALE

In general, the pledge of shares and the pledge of assets may be realised by way of private sale.

It is advisable that the sale procedure be detailed in the security agreement so as to ensure that the sale is made at arm's length from the lender and reduce the chances of such private sale being deemed a sale at an undervalue (negócio usurário) or a foreclosure of the security (pacto comissório).

Even if the security agreement does not detail the steps required to realise the pledge through private sale, such procedure may still take place provided that the agreement so allows and the sale is made for the fair market value or a fair consideration.

To determine the fair market value, it is advisable to appoint an appraiser to assess the value of the pledged shares. In our view, the security agreement should also specify the evaluation criteria to be used in determining the fair market value, which may take into account, among other things, the trading conditions of the pledged assets or securities then current and the availability of potential buyers to purchase the shares within a short timeframe from the date of the determination of the fair market value and the willingness to pay immediately and in cash, as this may be essential to complete the sale in a timely fashion.

In order to realise the pledge it is also customary to grant a power of attorney to the chargees, although it may be preferable that the power be given to a security agent independent from the lenders to ensure that the sale is made at arm's length from the lenders.

5. INSOLVENCY OF THE BORROWER

5.1. VOIDABILITY OF SECURITY INTERESTS

The first concern for lenders when they have to consider a possible insolvency of the borrower or the security provider are the conditions under which transactions can be voided under Portuguese insolvency law, codified by Decree-Law 53/2004, of 18 March 2004, as amended (Insolvency Code).

Under Insolvency Code, the following transactions, among others, may be cancelled by the insolvency administrator:

• personal guarantees granted by the insolvent in the six months prior to the initiation of the insolvency proceedings which are related with transactions which are not in the best interest of the insolvent;
• security interests given in respect of existing obligations or new obligations replacing such existing obligations in the six months prior to the initiation of the insolvency proceedings; or
• security interests granted simultaneously with the creation of the secured obligations in case they are undertaken in the sixty days prior to the initiation of the insolvency proceedings.

In addition, the insolvency administrator may void any transactions deemed prejudicial to the insolvency estate performed in the two years prior to the initiation of the insolvency proceedings, which include any transactions that are considered prejudice the rights of the creditors of the insolvency estate or to have been entered into with a counterparty acting in bad faith.

5.2. RANKING OF CLAIMS

A key issue to consider in the event of insolvency of the borrower or a guarantor is the ranking of the lenders’ claim.

The Insolvency Code distinguishes four types of claims:

• preferred claims (créditos privilegiados), which entail preference on the company’s assets;
• secured claims (créditos garantidos), which entail a security on any of the company’s assets;
• common claims (créditos comuns), which do not entail any security or preference but are not deemed as subordinated debts; and
• subordinated claims (créditos subordinados).

The Portuguese Civil Code establishes specific preferred claims in respect both of movable assets and immoveable assets. Preferred credits include:

• the State and local authority’s credits for indirect taxes, direct taxes, as well as for property tax registered for collection in the current year on the date of the attachment, or equivalent act, and in the two preceding years;
• employees' credits arising from employment contracts, or from the breach or termination of employment contracts, arising in the six months prior to the insolvency declaration;
• credits for court expenses incurred directly in the common interest of the creditors, for the preservation, enforcement, or liquidation of movable and immovable assets;
• credits for debts related to ground rents for the current year on the date of the attachment, or equivalent, and for the previous year, enjoy a privilege over the rents of the respective urban properties.

Therefore, special care should be taken in ensuring that there are no preferred claims or, if there are, that the lender will be entitled to declare the default.

Lenders should also be aware that under the Insolvency Code certain claims will be deemed legally subordinated, including among others:

• shareholder loans (suprimentos);
• claims subordinated by agreement between the parties;
• claims arising from gratuitous acts of the insolvent;
• interest of non-subordinated claims accrued after the insolvency ruling up to the value of the respective assets (save those benefiting of a security interest);
• interest of subordinated claims accrued after the insolvency ruling; and
• claims of persons especially related with the insolvent, provided that the special relationship already existed before the insolvent incurred in such debt and of any third parties that acquired such credits in the two years prior to the initiation of the insolvency proceedings.

5.3. IMPLICATIONS FOR SECURITY INTERESTS

The declaration of insolvency leads to the suspension of all enforcement proceedings or measures initiated by creditors that affect the insolvent estate's assets, and prohibits the commencement or continuation of any enforcement actions pursued by creditors.

Therefore, following the declaration of insolvency, creditors shall no longer be entitled to enforce security interests outside court proceedings, and collateral may only be sold within the insolvency process. This means that all enforcement actions shall be suspended or limited and secured creditors will not be permitted to freely exercise their security rights.

Financial pledges are excepted from this rule; the commencement of the insolvency proceedings will not preclude the financial pledgee's right to set-off its claims.

6. GOVERNING LAW

One of the issues that may now arise more often is that of the choice of the governing law.

Like in most continental countries, during the eighties and, in the case of Portugal, well into the last decade of the century, most international financing transactions were governed by English law.

The adoption of English law like documents, in the last decade, as standards for local law documentation, Portuguese law became the preferred solution for most transactions, as international banks became more comfortable with Portuguese law documentation.

There are advantages and disadvantages to any of these options.

In favour of choosing English law as the governing law for financing documentation are:

• English law documentation is well known in the international markets;
• Portuguese law aspects can be managed in an efficient manner in line with international practice by local lawyers;
• English courts have issued precedents on many controversial legal issues;
• procedures in English courts are more efficient and expedite; and
• as a rule, judgments of English courts will be enforceable in Portugal, unless they contradict Portuguese “public policy”.

On the other hand, the choice of Portuguese law is also not without many merits on its own, as there will always be matters which are subject to Portuguese law, such as the capacity of the borrower and or guarantors and the security documentation must, as a rule, be governed by Portuguese law. As a result, choosing Portuguese law as the law governing all aspects of the transaction will facilitate the negotiation.

In addition to these arguments, we may add that:

• local borrowers prefer using Portuguese law;
• the judgements of English courts will ultimately have to be enforced and pass the “public policy” test; and
• in event the borrower becomes insolvent, Portuguese courts will take over the matter, where English law documentation will be more open to challenges than Portuguese law contracts.

The arguments for and against the choice of one or the other show that this choice must made on the basis of the real interest of the parties involved.

In our view, English law should be used when the borrower needs to access a wider pool of investors around the world, many of whom would be more comfortable in using English law (provided they deal adequately with Portuguese law issues), as the English legal and court system has unrivalled experience in handling and preparing for disputes on financial transactions.

On the other hand, Portuguese law should be used in transactions where the international investors are better versed in the concepts of Portuguese law and can make an informed assessment of the risks involved, as having to deal with Portuguese law only will avoid the disruptions in the overall deal structure that will naturally arise when there are multiple laws applicable in case of dispute.

7. FINAL REMARKS

The main lesson that should be learned from the crisis is that lenders and borrowers alike must be more careful in negotiating transactions. Using standardised documents is useful and improves the overall quality of the final documentation, but it does avoid making a careful assessment of the legal risks.

This means that lenders should be more careful in their legal due diligence on the local borrowers and have a more in-depth knowledge of local law.

For borrowers, this means that they should be prepared to answer questions from lenders and anticipate issues that, in general, borrowers try to avoid, such as potential defaults and the risk of insolvency.

These lessons apply to any jurisdiction and Portugal is no exception. The recent pressures on Portuguese sovereign debt may lead potential lenders to have to consider more carefully any risks associated with their Portuguese clients, including the legal risks.

Portuguese law documentation, though broadly in line with international standards, can and should be improved to offer real answers and solutions to the issues raised by international and local lenders. This will mean that lenders and borrowers should consider carefully the legal implications of the existing market standards and question how they will apply if the transaction is put at risk by a default or the insolvency of the borrower.

Pursuing efficiency

The European Green Deal launched in 2019 established the roadmap for reducing emissions in the EU by at least 55%.

To align with these objectives, Portugal developed the National Energy and Climate Plan 2030 (Plano Nacional de Energia e Clima - “PNEC 2030”), which is the main national policy instrument for energy and climate for the coming decade. PNEC 2030 establishes clear goals for scaling up renewable energy capacity. By the end of the decade, it aims to install: 20.8 GW of solar power capacity, and12.4 GW of wind power capacity. These two sources alone will contribute more than 33 GW of intermittent renewable capacity, in addition to the power already generated from other existing sources.

To manage this rapid growth and ensure reliable grid operations, the PNEC also plans for 1.5 GW of battery storage capacity. This is vital for stabilizing the public electricity grid (known as the Rede Elétrica de Serviço Público, or RESP). Intermittent renewables like solar and wind naturally fluctuate, creating periods of excess supply (surplus) and insufficient supply (deficit) compared to demand. Batteries help smooth these imbalances, preventing disruptions and supporting a more resilient energy system.

The Portuguese National Electricity System Law, enacted by Decree-Law No. 15/2022 includes the licensing of storage facilities.

A storage facility may take one of the two forms:

• Standalone Storage: when the facility is directly connected to the RESP without being associated with a power generation plant or a self-consumption production unit (Unidade de Produção para Autoconsumo – “UPAC”); or
• Co-located Storage: when the facility is combined with a power generation plant or a UPAC, both sharing the same grid connection point to the RESP.

In the period from January to August 2025, Portugal generated 33,107 GWh of electricity, with renewables accounting for 76.9% of total generation—the fourth-highest share in Europe, following Norway, Denmark, and Austria. This strong renewable performance highlights the growing need for energy storage solutions, which will be critical to achieving a resilient and sustainable energy transition.

Portuguese storage as of today

Portugal’s energy-storage market is entering a new stage of maturity, combining grid-scale standalone batteries and hybrid (co-located) systems with renewable plants. As of mid-2025, total installed and near-operational capacity amounts to roughly 120 MW, with several hundred megawatts in development.

The first co-located projects are already in operation, including Galp’s Alcoutim hybrid PV plant (5 MW/20 MWh, operational since April 2025) and EDP’s Alqueva floating solar system (1 MW/2 MWh, in service since 2022). Additional hybrid capacity is being deployed, namely by Iberdrola, Greenvolt, Akuo, EDP and GALP, supported by Portugal’s Recovery and Resilience Plan (PRR) programme under the “Flexibility and Storage” incentive call.

Under this PRR scheme, 41 projects were approved, totalling around 500 MW of new storage capacity and € 99.75 million in grants. The main beneficiaries include Akuo (80 MW), Iberdrola (80 MW), GALP (55 MW) and EDP (30 MW)—mostly co-located solar or wind hybrid plants.

On the standalone side, the Casal da Cortiça facility in Leiria, developed by Infraventus Energy Storage is Portugal’s first fully merchant large-scale battery using lithium technology with a power output of 12 MVA and a charging capacity of 24 MWh. Commissioned in June 2025, it trades energy on the spot and ancillary system services. Industrial behind-the-meter storage is also emerging, exemplified by Bondalti’s 12 MWh system in Estarreja developed by EDP.

The next milestone is EDP’s BigBATT project at Carregado (180 MW / 360 MWh), a stand-alone grid-connected battery co-funded by the EU Innovation Fund, designed to deliver fast-frequency response and other ancillary system services to the public electricity grid from 2026 onwards.

Public incentives have so far focused on co-located storage projects, while standalone capacity — around 24 MWh currently operational and several hundred megawatts planned — is expected to grow rapidly following the 750 MVA system-services auction announced by the Portuguese Government scheduled for early 2026.

THE PRIOR CONTROL MECHANISM

Prior control FOR standalonestorage

The production and/or standalone storage of electricity is subject to a prior control scheme, as follows:

• Production and Operation Licence: for facilities with an installed capacity exceeding 1 MW;
• Prior Registration and Operation Certificate: for facilities with an installed capacity above 30 kW and up to 1 MW;
• Prior Communication: for production facilities with an installed capacity above 700 W and up to 30 kW.

The issuance of the Production Licence depends on the prior allocation of a capacity reservation title (Título de Reserva de Capacidade - “TRC”), which is subject to the provision of a financial deposit.

In addition, storage activity is subject to a prior verification procedure concerning the charging capacity from the RESP, carried out by the grid operator and the global manager of the national electricity system. For this purpose, before granting the TRC, the Portuguese Directorate of Energy (Direção Geral de Energia e Geologia - “DGEG”) requests opinions from both these entities, which sets out the maximum power from the RESP.

The TRC may be obtained through one of the following three modalities:

• General Access: Applicable when there is available reception capacity in the RESP. Subject to the payment of a financial deposit to DGEG in the amount of EUR 10,000/MVA for a minimum period of 30 months, or until the storage facility enters into operation.
• Agreement with the Grid Operator: Applicable when there is no available reception capacity in the RESP and the Government has set the maximum annual injection capacity to be allocated under this modality, by 15 January of each year. Subject to the payment of a financial deposit to the grid operator in the amount of EUR 10,000/MVA for a minimum period of 30 months.
• Competitive Procedure: Applicable when the Government decides to launch a competitive procedure for the allocation of TRC. The terms and conditions governing the allocation of the TRC and the provision of financial deposits are defined in the procedure documentation.

PRIOR CONTROL FOR CO-LOCATED STORAGE

The licensing of a storage facility co-located with a power generation plant may occur under one of the following circumstances:

• Ab Initio: when the licensing processes for both the generation and the storage facilities are initiated simultaneously; or
• A Posteriori: when the storage facility is to be installed at an existing generation plant.

In the case of Ab Initio storage, the applicable prior control procedure is that which governs the generation facility and encompasses both activities (generation and storage) simultaneously.

Conversely, A Posteriori storage follows the hybridization procedure, in which a new prior control title (Production License or Prior Registration) is issued for the storage project.

In hybridization, a new prior control title explicitly identify the injection capacity in the RESP allocated to the new storage unit and entail an amendment to the pre-existing TRC.

The application for the Production Licence is submitted by the relevant holder to DGEG, accompanied by the documents listed in Annex I of Decree-Law No. 15/2022, insofar as applicable, since DGEG notifies the applicant of the elements initially submitted in connection with the generation project’s Production Licence that remain valid. Within ten days of receiving the request, DGEG may request additional information, to be provided within a maximum period of 30 days.

If the hybridization concerns a project previously subject to Environmental Impact Assessment (AIA), no new consultation with the competent environmental authority is required, provided that the new storage project does not involve:

• Any change to the AIA decision or its underlying grounds;
• Any modification to the location of the generation facility or a reduction in its implementation area.

 Prior control SUMMARY

	Standalone Storage	Co-located Storage
Prior control scheme	•Production and Operation Licence: > 1 MW; •Prior Registration and Operation Certificate: > 30 kW and ≤ 1 MW; •Prior Communication: > 700 W and ≤ 30 kW	•Ab Initio: joint licensing with the generation facility (generation + storage under the same procedure); •A Posteriori: installation at an existing generation facility (hybridization procedure, in which a new prior control title is issued for the storage project)
TRC	Mandatory when energy injection into the RESP exceeds 1 MW	Not required for storage facilities, but mandatory for generation plants where energy injection into the RESP exceeds 1 MW
TRC Modalities	•General Access; •Agreement with the Grid Operator; •Competitive Procedure	Follows the TRC of the generation facility
Deadlines and Decision	Prior control title issued within a 30-day period following the expiry of a 20-day consultation period with external entities
AIA	Applicable if the legal thresholds are exceeded	Exemption from a new AIA if the amendment does not entail any change to the AIA decision or to the implementation area of the generation facility

 

PRIOR CONTROL DEADLINES

Title	Deadline for Obtaining	Extension	Exclusions from the Deadline
Production License	One year after obtaining the TRC	No limit, by order of the Government member responsible for the energy sector, in exceptional circumstances and upon duly justified request	N/A
Operation License	One year after obtaining the Production Licence		Periods related to the construction of the facility, grid infrastructures upgrades and administrative or judicial appeal proceedings
Prior Registration	N/A	N/A	N/A
Operation Certificate	Nine months after obtaining the Prior Registration	No limit, by order of the Government member responsible for the energy sector, in exceptional circumstances and upon duly justified request	The deadline is suspended in the event of delays in the availability of grid connection conditions by the RESP operator

 

USE OF RESERVE CAPACITY

DGEG established (Order No. 1857/2025) a specific procedure applicable to the processing of licensing requests for electricity storage facilities that use previously allocated injection capacity reservations in the RESP, in the following cases:

• Technology change of a solar generation facility with a TRC, where construction has not yet begun;
• Standalone or co-located storage making use of injection capacity previously allocated to a renewable energy generation facility.

In the case of a technology change, the TRC granted under the general access regime for a solar generation facility may be amended for a standalone storage installation, provided that, at the time of the request, the generation facility has not yet started construction.

The amendment request must be submittef by the TRC holder to DGEG, accompanied by the following information: (i) identification of the existing TRC, (ii) summary of the intended operation conditions, (iii) maximum injection capacity in the RESP, and (iv) maximum apparent power for charging from the RESP.

The injection capacity granted under a TRC allocated to renewable energy generation plants can also be used to apply for a Production License for a standalone or co-located storage facility, provided that the connection is:

• In the case of the transmission grid: at the same interconnection point;
• In the case of the distribution grid: within the same circuit.

The application must be submitted by the TRC holder to DGEG (with the express authorisation of the storage facility owner) and include the documents listed in Annex I of Decree-Law No. 15/2022, as well as:

• The operation conditions of the storage facility (maximum injection and charging through the RESP); and
• A written agreement between the storage facility owner and the generation facility owner, coordinating the right to inject energy into the RESP

DGEG checks the completeness of the application and then forward it to the grid operator for an opinion. If it is favourable, DGEG issues the Production License.

Use of reserve capacity (summary)

Model	Required Documents	Procedure	Decision Period (DGEG)	Outcome
Technology change	•Identification of the of the existing TRC; •Summary of the operating conditions; •Maximum apparent power for charging through the RESP; •Justification confirming that construction of the generation facility has not yet started.	•Application submitted to DGEG; •Verification by DGEG; •Opinion from the Grid Operator (30 days); •Opinion from the Global System Manager (15 days).	Final decision after opinions from the Grid Operator and the Global System Manager (45 days in total, unless delayed).	Amended TRC issued
Standalone or Co-located Storage (previously allocated TRC)	•Supporting documents listed in Annex I of Decree-Law No. 15/2022; •Operating conditions (maximum injection and charging power through the RESP); •Written agreement between the storage facility owner and the generation facility owner.
				Production License issued

Use of reserve capacity with restrictions

Under the general access model for TRC allocation, the law distinguishes between restricted and unrestricted access.

The restricted access option allows the connection of standalone storage facilities to the RESP, subject to energy injection limits that depend on grid conditions and available capacity at any given time. The goal is to enable new connections through agreements that make use of existing infrastructure, even in areas with limited capacity.

In simple terms, restricted access applies when the grid operator, after a technical assessment of a new connection request, identifies the need for investment or reinforcement to ensure firm access.

The licensing process is the same for both general access modalities (restricted and unrestricted), and the developer must obtain: (i) a TRC, (ii) a Production Licence, and (iii) an Operation Licence.

ERSE Directive No. 3/2025 establishes the general conditions for restricted access agreements, setting out the contractual and technical framework for this modality.

Restricted access is formalised through a Restricted Access Agreement, entered into between the storage facility owner and the grid operator. The agreement consists of: (i) General Conditions, defined by ERSE and applicable to all cases; and (ii) Specific Conditions, which set out the particular terms for each facility.

The facility owner must have real-time communication systems in place to enable compliance with grid operator instructions regarding capacity limitation and/or reduction.

When restrictions apply to more than one facility under agreement, their activation follows a “Last in, First out” methodology, meaning that the most recent agreement is curtailed first, and so on, until the total restricted capacity is reached.

The term of the agreement is defined in its specific conditions and may terminate when the initially restricted capacity becomes firm (i.e., when the grid becomes fully available), by mutual agreement, in the event of material changes to contractual conditions, or if the owner fails to comply with curtailment orders issued by the grid operator.

Use of reserve CAPACITY withrestrictions (summary)

Access Type	Allocation of a TRC under general access, which may be subject to restrictions or not.
Purpose	To allow the connection of facilities in areas with limited capacity, making use of existing infrastructure.
When it applies	Whenever, following a technical assessment, the grid operator identifies the need for investment or reinforcement to enable firm access.
Licensing	Same as unrestricted access: (i) TRC, (ii) Production Licence, and (iii) Operation Licence.
Access Agreement	Entered into between the facility owner and the grid operator. It includes: •General conditions (defined by ERSE and common to all cases); and •Specific conditions (applicable to each facility).
Owner’s obligations	•Real-time communication systems; •Compliance with limitation or shutdown instructions; •Respect for the power limits defined in the TRC.
Restriction Management	Application of the “Last in, First out” methodology — the most recent agreements are curtailed first.
Duration and Termination	Defined in in the specific conditions. In any case, the agreement terminates when: •The restricted capacity becomes firm; •By mutual agreement of the parties; •In case of non-compliance with curtailment orders.

ENVIRONMENTAL ASSESSMENT

The Environmental Impact Assessment Legal Framework applies to energy co-located storage (with a power generation facility), under the supervision of the Portuguese Environment Agency (Agência Portuguesa do Ambiente – “APA”).

For co-located storage, the addition of a storage facility to an existing power plant is subject to an Environmental Impact Assessment (Avaliação de Impacto Ambiental – “AIA”) according to the applicable thresholds for generation facilities. Projects subject to AIA include:

• Solar power plants: projects with an installed capacity above 50 MW, or occupying an area exceeding 100 hectares, or projects above 20 MW or covering more than 10 hectares when located in sensitive areas;
• Wind farms: projects with more than 20 turbines or installed capacity above 50 MW, or with more than 10 turbines or capacity above 20 MW when located in sensitive areas.

Changes or extensions to an existing power plant already subject to AIA do not require a new assessment, provided that the storage installation remains within the original project area.

In its turn, standalone storage projects are also subject to the supervision of APA. They are not subject to conduct an AIA if they do not exceed the following capacity thresholds:

• In general: installed power below 50 MW and storage capacity below 200 MWh;
• Sensitive areas: installed power below 20 MW and storage capacity below 80 MWh.

Whenever these thresholds are exceeded, the standalone storage project will require an AIA, pursuant to the general rules of the Environmental Impact Assessment Legal Framework.

Storage projects below AIA thresholds located in sensitive areas are subject to an Environmental Incidence Analysis (Avaliação de Incidências Ambientais – “AINCA”).

The AINCA is conducted by the local Regional Coordination and Development Commission (“CCDR”) and is based on an Environmental Incidence Study submitted by the project promoter.

Environmentalassessment (summary)

Project Type	AIA Conditions	Exceptions	AINCA
Co-located Storage	•Solar plants: > 50 MW or panel/inverter area > 100 ha; •Solar plants in sensitive areas: > 20 MW or area > 10 ha; •Wind farms: more than 20 turbines or installed capacity > 50 MW; •Wind farms in sensitive areas: more than 10 turbines or installed capacity > 20 MW	Modifications or extensions of a power generation facility already subject to AIA do not require a new assessment, provided the storage installation remains within the original project area.
Standalone Storage	Not subject to AIA if below the following thresholds: •General case: < 50 MW and capacity < 200 MWh; •Sensitive areas: < 20 MW and capacity < 80 MWh	If the thresholds are exceeded, AIA is required and the Environmental Impact Assessment Legal Framework applies.	Storage projects below AIA thresholds located in sensitive areas.

ADDITIONAL LICENSING

In accordance with the Framework for Urbanization and Building, the construction of storage facilities must obtain:

• A construction permit; or
• Approval of a prior notice request (“PIP”).

When a construction permit application is submitted, the project designs — namely the architectural project — must be reviewed to verify compliance with land-use and territorial planning instruments.

The final approval decision of the construction permit constitutes the authorizing title for the start of construction works.

The prior notice procedure consists of a declaration that, once duly completed and submitted, allows for the immediate commencement of construction works, without the need for any additional administrative act.

Upon completion of the works, the promoter must submit to the municipality a declaration of responsibility confirming that the works were carried out in accordance with the approved projects.

The project promoter bears the costs of building the infrastructure required to connect the storage facility to the RESP, including the costs related to the land occupation necessary for such infrastructure.

As a general rule, projects with an installed capacity above 50 MVA are connected to the transmission grid, while those below 50 MVA are connected to the distribution grid.

Once the TRC is obtained, the project promoter must request the grid operator to connect the project to the RESP. Upon receiving the request, the grid operator must inform the promoter about: (i) the infrastructure required to ensure the connection; and(ii) the estimated connection costs.

All costs and charges associated with the licensing process and construction of the connection infrastructure are the responsibility of the promoter, subject to technical validation of the project by the grid operator. After completion, the connection infrastructure becomes part of the RESP and falls under the concession of the respective grid operator.

MUNICIPAL GRANTS

The holder of a storage facility with an assigned connection capacity above 1 MVA is required to grant, once and free of charge, to the municipality (or municipalities) where the storage facility is located, one of the following:

• A self-consumption unit with an installed capacity equivalent to 1% of the storage facility’s capacity; or
• A storage installation to be installed in municipal buildings or public-use facilities, or, as indicated by the municipality, for the benefit of local communities located near the power generation or storage facility; or
• Electric vehicle charging stations located in public spaces and intended for public use, with an equivalent capacity.

The municipality may opt, instead of the grant, for a one-time compensation of EUR 1,500 per MVA of assigned connection capacity.

The monetary compensation must be used to promote energy efficiency in municipal buildings, public-use facilities, or residential buildings serving local populations.

The holder of the storage facility is responsible for installing the infrastructures in the locations indicated and made available by the beneficiary municipalities, after these have obtained their respective prior control titles.

The grants are formalized through a protocol to be entered into between the storage facility holder and the municipality (or municipalities) where the facility is located, between the issuance of the Production License and the issuance of the Operation License.

The duly signed protocol is a prerequisite for the issuance of the Operation License.

Storage licensing steps

1. TRC

• General Access;
• Agreement with the Grid Operator;
• Competitive Procedure

2. Prior Control

• Standalone Storage: Production License / Prior Registration / Prior Communication
• Co-located Storage: Ab Initio (included in the generation facility’s licensing process) or A Posteriori (hybridization)

3. Environement Asessment

• AIA (if thresholds are exceeded;
• AINCA (if located in sensitive areas without exceeding thresholds)

4. Municipal Control

• Construction License or Prior Communication

5. Connection to thr RESP

 Sale of Energy

The holder of a storage facility is entitled to sell the stored energy and to receive remuneration through different channels, namely:

• Organized Market (MIBEL): The stored energy may be sold on the Iberian Electricity Market (MIBEL) at the prevailing spot price, through a duly qualified market agent.
• Bilateral Contracting (PPA): The sale of energy may take place under a bilateral power purchase agreement (PPA) with suppliers or directly with consumers, either under a physical modality (physical delivery of the stored electricity), a virtual modality (without physical delivery, through a financial agreement based on the market price of energy), or any other form freely agreed between the parties.
• Aggregators and Suppliers: The stored electricity may be sold to an aggregator or electricity supplier at a freely negotiated price.

In the absence of market-based aggregators, the energy may be sold to the last-resort aggregator, at a price defined according to the reference tariffs set by ERSE.

• Feed-in Tariff: If the storage facility benefits from a guaranteed remuneration regime, the stored energy is delivered to the entity legally responsible for acquiring electricity from renewable sources, in exchange for payment of the applicable tariff.
• Ancillary System Services: Storage facilities may also obtain additional revenue by providing system services, including:

1. Capacity and reserve services;
2. Frequency and voltage regulation;
3. Grid congestion management; and
4. Demand response and back-up services.

• Sale of Storage Capacity: The holder may also sell storage capacity to third parties, under terms freely agreed between the parties

Market Outlook

The lack of injection capacity in the RESP remains the main obstacle to the development of stand-alone storage projects, making it essential that the planned investments by the grid operators are effectively implemented. Otherwise, storage will remain limited to co-located systems, reducing flexibility and compromising the security and resilience of the national electricity system. Furthermore, the recent blackout in the Iberian Peninsula has highlighted the importance of strengthening system services, accelerating the integration of storage as an essential element to ensure supply stability in an energy system increasingly dependent on intermittent renewable sources.

The ancillary system services market, which remunerates resources that contribute to the balance between electricity generation and consumption, is currently undergoing profound transformation.

By the end of 2025, Portugal is expected to join the European PICASSO platform (Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation), which will harmonize the operation of aFRR (automatic Frequency Restoration Reserve) — the service that automatically corrects, within minutes, deviations between generation and demand, preventing frequency instability in the power system.

With the implementation of PICASSO, the aFRR will operate within an integrated European market, featuring cross-border activation and 15-minute granularity. Activated energy will be remunerated based on performance in the European market, while availability payments in Portugal will continue to follow a pay-as-cleared model — meaning all participants receive the price of the highest accepted offer. In alternative models such as “pay-as-bid” — used in Austria, the Czech Republic, and Germany under the ALPACA scheme — each operator is paid the price it bids, which tends to increase competition and reduce system costs.

The capacity auctions for storage systems, announced by the Minister for Environment and Energy and expected to take place by January 2026, with a total capacity of 750 MVA, represent an important step towards rewarding the security and stability that batteries provide to the electricity grid, thereby strengthening system resilience.

Nevertheless, stand-alone storage projects continue to face high costs and a lack of predictable remuneration models. The creation of availability-based remuneration mechanisms, particularly long-term contracts, will therefore be essential to ensure minimum returns, attract private investment, and guarantee the economic viability of these projects.

 

INTRODUCTION

Guarantees of Origin (“GO”) are certificates that prove that a given amount of electricity has been generated from renewable sources.

Each GO corresponds to 1 MWh of energy, meaning that only one GO can be issued for each unit of energy expressed in MWh.

These certificates are designed to promote the generation, recognition, and consumption of renewable energy, encouraging active participation from producers, suppliers, and consumers in the transition to a more sustainable energy system.

The Guarantees of Origin (GO) system has been implemented across all European Union Member States to promote the use of energy from renewable sources.

In Portugal, although planned since 2012, the GO system was only launched in 2020. The first Portuguese GO was issued in June 2020, followed by the first GO auction in July 2021.

The system is managed by the Guarantees of Origin Issuing Entity (Entidade Emissora de Garantias de Origem – “EEGO”), a role assigned to REN – Redes Energéticas Nacionais, S.A. (“REN”), which also operates Portugal’s national electricity transmission grid.

The EEGO Procedures Manual, approved by the Energy Services Regulatory Authority (Entidade Reguladora do Setor Energético – “ERSE”) through Directive no. 17/2023, outlines the rules for the operation of the EEGO and the GO issuance and monitoring system (the “EEGO System”). This system functions through a digital platform that ensures transparent and efficient issuance and tracking of GOs.

FUNCTIONS OF THE EEGO SYSTEM

1. Registration of participants and production Facilities (Registration of participants and renewable energy production facilities eligible for GO issuance)
2. Issuance of GO (Certification of the renewable origin of generated energy through the issuance of GO)
3. Trading of GOs (Producers can trade and transfer their GOs to other entities, including energy producers and suppliers)
4. Cancelation of GOs (Cancellation of GOs following their use)

Registration of Participants and plants

Entities wishing to obtain and trade Guarantees of Origin must be registered in the EEGO System.

The registration request is approved within five business days following submission of the required documentation, after which access credentials to the EEGO System platform are issued.

Once the registration is approved, the participant must enter into an EEGO System Membership Agreement with REN and settle the corresponding registration fee.

To register as a participant at EGGO, it is necessary to:

a) Submit a registration request through the online platform (https://eego.ren.pt/), which must include:

- Commercial Registry Certificate with access code;
- Identification of the person responsible before EEGO;
- Identification of users authorized to operate within the EEGO System on behalf of the participant;
- Information required for billing and invoicing purposes; and
- Legal proof of the powers of the signatory.
b) Execute the EEGO System Membership Agreement; and
c) Settle the registration fee of €1,000 within a maximum of 20 days following execution of the Membership Agreement, under penalty of suspension of the participant status.

Which entities may participate in the EEGO System?

1. Energy producers
2. Energy suppliers,  including last-resort or GO traders

3. Owners of energy storage systems

4. Representative agents

5. Consumers

 REGISTRATION OF PLANTS

The registration of production facilities is conducted through the EEGO System platform. To initiate the process, applicants must submit a registration request along with detailed technical information about the production facility.

If requested by the Portuguese Directorate of Energy (Direção-Geral de Energia e Geologia – “DGEG”), the facility may undergo an initial audit within 15 business days of the request. A decision regarding the registration is issued within 10 business days.

All registration documents related to the production facility must be retained in both digital and physical formats for a minimum period of three years.

The following production facilities are required to be registered in the EEGO System:

• Facilities holding an operating license, or equivalent document granted by DGEG, for the production of electricity from renewable energy sources;
• Facilities holding a license or prior notice granted by DGEG for the production of heating and cooling energy from renewable energy sources;
• Facilities holding an operating license granted by DGEG to simultaneously produce thermal energy and electricity and/or mechanical energy; and
• Facilities authorized by DGEG for the production of renewable gases or low-carbon gases.

Small-scale production units (up to 1 MW) and self-consumption units are exempt from mandatory registration in the EEGO System until 31 December 2025.

ISSUANCE OF GO

Once the facility registration is completed, the producer may request the issuance of GOs.

Each GO corresponds to 1 MWh of energy produced and remains valid for 12 months from the end of the production reference period (one month).

Requests for the issuance of GOs must be submitted within a maximum of 3 months following the end of the production reference period.

The EEGO System allows for the issuance of the following types of certificates:

• GO for the production of electricity from renewable sources;
• GO for the production of heating and cooling energy from renewable energy sources;
• GO for high-efficiency cogeneration electricity;
• Certificates of Origin for efficient cogeneration electricity;
• GO for the production of renewable gases; and
• GO for the production of low-carbon gases.

To issue a GO, the producer must submit a request through the EEGO System in the form of a production statement, corresponding to a one-month reference period.

Producers benefiting from a feed-in tariff, production incentives (whether price or investment based), or whose energy is sold under long-term power purchase agreements or a grid capacity title awarded through auction under a guaranteed remuneration scheme may not sell their GOs separately. In such cases, GOs must be transferred to the DGEG as a condition for receiving the incentive.

Following the submission of the production statement, the EEGO issues and registers the GOs:

• In the participant’s account: within a maximum of 10 business days, except for cogeneration facilities, which are processed within a maximum of 20 business days.
• In the DGEG’s account: in cases of production facilities benefiting from support, investment incentives, or operating under long-term power purchase agreements under a guaranteed remuneration scheme

Production statements may be subject to periodic or random audits carried out by the EEGO, either directly or through external auditors.

The issuance of a GO is subject to a fee of €0.037/MWh payable to EEGO.

PROCEDURE FOR THE ISSUANCE OF GO

1. Prerequisites for insurance (Registration of participants and their respective production facilities.)

2. Submission of production statement (Statements correspond to one-month reference period and must be submitted within a maximum of 3 months following the end of the production reference period.)

3. Issuance of GOs (Upon receipt of the production statement, EEGO issues and registers the Gos in the producer’s account within 10 business days (or 20 days in the case of cogeneration facilities).

TRADING OF GO

TYPES OF GO TRADING

The trading of GO may occur under two modalities:

• By Transfer;
• Through Auction.

Transfer

• GOs may be transferred to other entities, including other producers and energy suppliers, through the EEGO System. They may also be transferred independently from the physical electricity to which they relate.
• However, producers benefiting from a guaranteed remuneration scheme may not transfer their GOs separately.

Auction

• Producers benefiting from a feed-in tariff, production incentives (whether price or investment based), or whose energy is sold under long-term power purchase agreements or a grid capacity title awarded through auction under a guaranteed remuneration scheme may not sell their GOs separately
• The GOs transferred to DGEG are then sold through a competitive auction process, organized and managed by DGEG.

 TRANSFER OF GO

The transfer request may be rejected only if the seller has any outstanding administrative fees owned to REN.

The request to transfer a GO must be submitted through the EEGO System online platform by the registered participant in which the GO is registered. REN withdraws the GO from the seller’s account and:

• If the buyer is registered in the EEGO System, transfer the GO to the buyer within five (5) business days and notify the buyer of the transfer;
• If the buyer is registered with a foreign entity equivalent to REN, notify that entity and, upon confirmation of the successful transfer, confirm to the seller that the transfer has been completed.

An administrative fee of €0.010/MWh applies for the completion of each GO transfer.

AUCTION OF GO

DGEG may trade the GOs received from producers benefiting from a support mechanism through a competitive auction mechanism.

These auctions allow electricity suppliers to competitively bid for GOs, ensuring that their customers are guaranteed electricity generated in Portugal from renewable sources.

The auctions are conducted through an online platform called OMIPLUS, exclusively dedicated for this purpose.

The entities involved in the auction process are:

• SU Eletricidade, acting as the Last Resort Supplier, is responsible for placing the GO on the market through auctions and for managing the financial settlement of auction revenues;
• OMIP – Pólo Português, S.G.M.R. S.A. is responsible for the operation of the auctions and the management of financial guarantees required for participation;
• REN is responsible for disclosing information on the GO available in the DGEG account, maintaining the list of active participants in the EEGO System, and performing the physical settlement of GO traded in the auction, following validation of the results by DGEG;
• DGEG is responsible for defining the terms and conditions governing the auctions and, through a public notice published at least 20 days in advance, setting out the quantity and characteristics of the GOs to be auctioned.

Model and stages of the GO Auction

The auction follows an ascending clock model, with the starting price established in the DGEG’s auction notice.

The auction proceeds through several successive rounds, the total number of which depends on the bids submitted by participants.

All bids are anonymous.

The auctions consist of the following phases:

• Initial Information: the first phase, during which all relevant auction details are made available on the auction platform;
• Order Submission: participants enter on the platform the quantities they wish to purchase and their corresponding bid prices;
• Post-Validation: In this phase, OMIP validates the submitted orders and allows participants to submit complaints regarding any rejected bids;
• Processing: the orders are processed and the auction results are calculated;
• Provisional Information: provisional results are published on the auction platform and undergo a validation process;
• Final Information: final results are made available on the auction platform and sent to participants by email. After the auction, OMIP notifies all participants of the total quantity of GOs allocated and the final clearing price.

PARTICIPATION IN THE AUCTION

To participate in the GO auctions, participants must be registered in the EEGO System and have completed the admission process as:

• Registered Participant: up to 5 business days before the auction date; and
• Qualified Participant: up to 2 business days before the auction date.

OMIP is responsible for issuing the admission decision for a candidate to become a Registered Participant, with such admission being subject to the execution of an Adhesion Agreement to the Auction Rules, which governs the participant’s relationship with the Last Resort Supplier, OMIP, and EEGO.

Admission as a Registered Participant must be requested to OMIP with the following documents:

• Commercial register certificate;
• Identification of shareholders holding more than 10% of the share capital;
• Operational information required for the management of financial guarantees, settlement, and invoicing.

The status of Qualified Participant is subject to the following conditions being met by the Registered Participant:

• Having provided to OMIP, by 12:00 PM on the second business day prior to the auction, an amount corresponding to the economic value of its bid;
• Having no outstanding debts or other pending obligations related to previous GO auctions; and
• Being registered in the EEGO system at least 2 business days before the auction.

POST-AUCTION PROCEDURE

According to official information published on the DGEG website:

• In 2021, 18.5 million GO were auctioned, generating revenues of around €9.2 million;
• In 2022, 25 million GO were auctioned, generating revenues of around €61 million;
• In 2023, 20 million GO were auctioned, generating revenues of around €105 million;
• In 2024, 21 million GO were auctioned, generating revenues of around €22 million.

Post auction calendar:

 GO Auction SCHEDULE for 2025

For the year 2025, the following GO auctions have been scheduled.

• 26th Auction: January 8, 2025
• 27th Auction: February 12, 2025
• 28th Auction: March 12, 2025
• 29th Auc
• 30th Auction: July 9, 2025
  tion: May 14, 2025
• 31st Auction: September 10, 2025
• 32nd Auction: November 12, 2025

CANCELLATION OF GO

The cancellation of a GO must be carried out by its holder through the EEGO System.

Cancellation a GO consists of withdrawing the certificate from the market and associating it with a specific energy consumption.

Once canceled, the GO is marked as used within the EEGO System, preventing its resale or reuse, thereby ensuring the integrity and reliability of the system.

Deadlines and validity rules

• GO have a validity period of 12 months from the end of the energy production period.
• Cancellation may be carried out within 18 months after that period.

As a rule, the cancellation request are completed within 5 business days.

Rights and Obligations UNDER the EEGO System

In case of non-compliance with any obligations, REN will notify the participant, who will have 15 business days to remedy the breach.

Failure to do so constitutes grounds for suspension of the participant from the EEGO system.

If the issues leading to the suspension are not resolved, the Membership Agreement may be terminated, and the participant, along with its respective production facilities, will be excluded from the EEGO System.

Rights:

Obligations:

• Comply with the EEGO Procedures Manual, including any provisions resulting from changes after the execution of the Membership Agreement;
• To promptly provide REN with all information required under the EEGO Procedures Manual and to notify any subsequent changes;
• To make all payments due under the Membership Agreement within the established deadlines.

LEGAL FRAMEWORK

key Legislation on Go

Decree-Law No. 15/2022, of 14 January, which establishes the organization and operation of the National Electric System, assigns to the national transmission system concessionaire (RNT) the role of the EEGO and entrusts ERSE with the regulation of this activity and the approval of the EEGO Procedures Manual.

ERSE Directive No. 17/2023, approving the EEGO Procedures Manual.

Decree-Law No. 84/2022, of 9 December, which sets out the framework for the issuance of GO, defines the entity responsible for the EEGO function, and establishes the obligations of producers.
Ministerial Order No. 53/2020, of 28 February, establishing the fees to be charged by the issuing entity of GO for the services provided.
DGEG Order No. 6560-B/2021, of 5 July 2021, establishing the Rules for the GO Auctions.
DGEG Notice of 13 May 2020, regarding the registration of renewable energy or cogeneration producers on the electronic platform for the issuance of GO.

DGEG Notice of 30 July 2020, extending the registration period on the GO issuance platform.
DGEG Order No. 2/2022, of 12 January 2022, extending the registration exemption for facilities below 1 MW.
DGEG Order No. 15/2023, of 13 May 2023, extending the registration exemption for facilities below 1 MW.
DGEG Order No. 7/2024, of 22 January 2024, extending the registration exemption for facilities below 1 MW.
DGEG Order No. 8/2025, of 20 February 2025, extending the registration exemption for facilities below 1 MW.