Energy storage regulation in Portugal

1. What electricity storage projects have been commissioned in your jurisdiction to date?

In Portugal, there has been a clear strategic focus on pumped hydro storage projects – currently there are several pumped storage projects across the country. Indeed, Alqueva’s pumped hydro storage project is one of the largest in Western Europe with a combined capacity of over 520 MW, which had an increase in its capacity since 2012.

A pilot project – Storage InovGrid – was launched by EDP and Siemens in January 2016, in which lithium-ion battery technology was implemented to supply electrical energy for Évora University Campus. This lithium-ion battery technology is combined with a storage capacity of over 360 KWh until the end of the project’s life cycle.

In addition, the Storage InovGrid project is intended to demonstrate that this technological driver – lithium-ion batteries – permits smart grid-scale use of the distribution network in order to promote energy efficiency. The main benefits of this technology relate to the operation of the distribution network, especially with regards to the continuity of the service through non-conventional storage systems.

2. What electricity storage projects are anticipated in your jurisdiction in coming years?

Certainly, the lithium-ion project pilot mentioned above planted a seed of curiosity in the minds of energy companies and developers, which may have positive repercussions in the future for new projects using this energy storage technology.

Portugal is a pioneer in the implementation of an electric vehicle network. This network links various stations across the country and enables electric vehicles to recharge, using a recharge card. Organised by the public entity, MOBI.E, this enterprise is in charge of the electric vehicle network, as well as creating the infrastructure in order to promote a transition to electric vehicles without constraints.

In 2014, the Fund for Innovation Support (“FAI”) was established to financially assist MOBI.E in order to enhance the network by building charge stations across the country.

In order to promote a more dynamic electric mobility network, it plans to install 124 charge stations (on public streets) and 50 fast-ways (covering service areas). Although the management is attributed to a public enterprise, commercial companies are entitled to supply the electricity needed to charge the batteries of the electric vehicles.

3. Is there any specific legislation/regulation or programme that relates to energy storage in your jurisdiction?

In spite of foreseeing some innovative projects for energy storage in Portugal, there is not yet a general framework in this field.

Nevertheless, Portugal has a sectorial legislative framework for the electric mobility network that describes the general framework of the network and the licences required to operate within it, this being Decree-Law no. 90/2014, of 11 June. In this particular field, we expect governmental deployment (through legislation, but also through other political measures) will encourage a paradigm shift towards electric vehicles that reduces carbon emissions and is more efficient in the long-run. A good example of an incentive in this field is the regime of tax benefits associated with the acquisition and utilization of electric vehicles.

Still within the scope of the electric mobility, it is important to highlight that, in a communication dated February 2016, the Secretary of State to the Minister of Environment announced an investment of €1.9 million for the further development of the electric mobility network in Portugal. Also, the approval of a set of legislation in this area was announced. It is expected that this legislation will complete the general framework of the electric mobility network that already exists, allowing the creation of an open and competitive market of energy suppliers and charge station operators, under the coordination of the network operator MOBI.E.

4. Please give examples of challenges facing energy storage projects in your jurisdiction and how current projects have overcome these challenges.

In relation to pumped hydro storage projects and lithium-ion battery technology, the main challenges can be summarised as:

  • higher operational costs – as mentioned above, all projects begin with a pilot project, therefore the instalments and experiments represent higher costs and revenue uncertainty, which is another challenge, as such technological experiments have not always been a success story; and
  • commercial companies will need to demonstrate licence compliance, which sometimes is a complex process, due to the environmental and technical issues which arise during the implementation of such projects.

With regard to the electric mobility network, there are three main obstacles that need to be tackled in the future:

  • difficulty on charging electrical vehicles combined with lack of charge stations;
  • financial constraints in acquiring electric vehicles; and
  • cultural obstacles as the paradigm shift is difficult to achieve.

Overcoming these three challenges will simply take time. People need to gain confidence in electric vehicles, and know that there is an infrastructure capable of supporting their needs. Only a strong foundation can assure and build this confidence. Therefore, the regulator, Government and industry would need to play their role efficiently in order to promote higher levels of trust in both investors and consumers.

5. What are the main entities in the electricity sector and what are their roles or expected roles in relation to energy storage

Firstly, we would point the role of the Regulator (“ERSE”) which is responsible for regulating the electricity sector. ERSE is a public corporate body with administrative and financial independence.

ERSE performs its duties independently, within the framework of the law. Moreover, ERSE strongly encourages efficient energy use and protection of the environment. Therefore, regarding energy storage, we expect ERSE will have a special role in this area.

Also, the Government will play a strategic role, as it will outline the guiding principles of energy policy.

Industries are expected to promote innovation and a shift through technology drivers, including implementing and testing new technological advancements in order to promote efficiency in the electricity sector.