Global Onshore Wind Market Report

Portugal has historically had a supportive policy framework for onshore wind energy. However, legislative changes and increased competition have limited its expansion capabilities. To address this, Portugal has revised its carbon neutrality targets for a rapid transition. In 2022, it announced that it would renew its 80% clean energy in electricity production target from 2030 to 2026 (Electrek, 2022). Additionally, it plans to amend its ‘Roadmap to Carbon Neutrality 2050’ to 2045, five years ahead of the initial target (EURACTIV, 2022). 

To achieve its goals, Portugal aims to reach 10.4GW of onshore wind by 2030, which is an increase from its previous estimate of 9GW (Recharge News, 2023). This translates to approximately 715MW of annual capacity additions. To accomplish this, the Portuguese government plans to mobilize €25 billion in funds over the next ten years for renewable capacity expansion. Moreover, it aims to attract another €75 billion in investments (Recharge News, 2023). While the funding is not specifically designated for onshore wind, it has a significant potential for development compared to other technologies. 

The process of securing environmental licensing for onshore wind farms is complex, which is hindering the expansion of onshore wind energy. To address this issue, the Portuguese government introduced Decree-Law No. 30-A/2022 at the beginning of 2022. This law has simplified some licensing steps, resulting in increased production (Lexology, 2022). It is a temporary measure that allows power plants to operate without an operation license or certificate as long as the grid operator ensures the grid injection conditions. Another change is that Portugal no longer requires an Environmental Impact Assessment (EIA) for wind stations located more than 2 km apart, which has helped to speed up permit procedures. Furthermore, the government has announced another plan, Decree-Law No. 15/2022, which aims to optimize repowering wind farms and hybridizing projects (Lexology, 2022). This streamlined permitting process will focus on solar-wind hybrid projects because of their potential to overcome land availability issues.

The 2026 binding renewable target will drive the future deployment of onshore wind energy, as solar PV and offshore wind alone will not be enough to meet the requirement, even though they have received more policy attention than onshore wind in recent times. 

Portugal offers significant economic advantages for investors and foreign energy companies to operate without market and trade restrictions. The government has promoted a market for renewable energy, which attracts foreign institutions and corporations for investment. In early 2021, the European Investment Bank (EIB) and BPI provided EDP Renováveis with €112 million in funds to build and operate two wind farms in Portugal with a total capacity of 125MW (European Commission, 2021). In September 2023, the European Commission enabled funds of €22.2 billion for a recovery and resilience plan, out of which about 41.2% is allocated to attain climate goals to improve energy efficiency through the expansion of renewables, including cost-effective onshore wind (European Commission, 2023).

Apart from regulatory and lending institutions, companies receive assistance from international lenders to raise funds to develop projects in advantageous locations to meet their decarbonization targets. For example, Aquila Clean Energy raised €1 billion from EIB under InvestEU to develop 50 onshore wind and solar PV projects in Portugal and Spain. The total investment accounts for €2 billion with a total capacity of 2.6GW (European Commission, 2022). This indicates an increased presence of international energy producers in the Portuguese renewable sector, joining hands to bridge the investment gap for renewable project expansion. Furthermore, after streamlining licensing procedures, hybrid (Solar-Wind) projects are gaining significant traction to generate larger volumes in limited land. To this, an investment of €600 million in a hybrid project was announced in 2022 by Endesa Generación Portugal, combining solar, wind, green hydrogen and a 168.6MW battery energy storage system (BESS) as a replacement for Portugal’s last coal power station (Energy Storage News, 2022).

Attention is also being given to improving the grid infrastructure and transmission networks to accommodate the increased capacity building of renewable projects. The EIB has already announced lending €450 million to a Portugal-based energy company, Redes Energéticas Nacionais (REN), to upgrade the transmission network (EIB, 2023). This aims to enhance efficiency and modernize the electricity transmission to handle the deployment of 4.2GW of extra capacity by 2026. Such initiatives can raise the penetration of renewables in Portugal.

Another segment that has assisted in the growth of renewables in Portugal is the PPA (power purchase agreement) and merchant power projects. Although the PPA market has recently been skewed towards solar PV and offshore wind, the onshore wind sector has the potential to take off and show a strong presence on the back of declining project costs.