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Portugal Rocks Renewables: 45% Renewable Electricity by Year's End
Alex Aylett, 16 Aug 10

For the past 5 years Portugal has been pushing a dramatic shift to renewable energy. Compared to the standard “20% renewables by 2020” targets that are often brought out at press conferences, its accomplishments are impressive: By the end of the year nearly 45% of its electricity will come from renewable sources. That's up from 17% five years ago.


A wind farm at Barão de São João, south of Lisbon. Photo: Rupert Eden for The New York Times (via The New York Times)


Elizabeth Rosenthal has written an excellent front page feature in the New York Times on how they managed it.

If you think of it as a recipe, there are three key ingredients of Portugal's success:

  • 1 part opening up of the energy sector to market forces (including the privatization of energy utilities)
  • 1 part technological modernization (in particular the creation of a smart-grid able to handle diverse sources of renewable energy), and
  • 2 parts savvy country-wide energy policy (including guaranteed rates for renewables, and the EU Carbon Trading System).

But like any recipe you also need a chef, in this case Prime Minister José Sócrates who came in on a landslide victory in 2005 and pushed through energy reform.

The current system is a mixture of wind, solar, hydro, small scale decentralized renewables on people's homes (see my last post), and some power still coming from natural gas generators. The Times gives a nice snapshot of the type of “plate-spinning” necessary to keep this kind of system running. (Not mind you, that a traditional energy grid is simple to run either.)

The financial costs seem to have been relatively minor. The state has not used taxes or debt to fund this transition. The costs are born by the private power producers and come out in the rates paid by consumers. Over the past 5 years, electricity costs have gone up 15%. That's not insignificant, but utilities are asking for similar increases here in North America, without providing any where near the kind of innovation taking place in Portugal. All the same, voters have been unhappy about rate increases and it seems that this is at least partially responsible for Sócrates narrow victory in 2009.

I've posted short excerpts below, but the full piece is well worth reading.
---

“You cannot imagine the pressure we suffered that first year,” said Manuel Pinho, Portugal’s minister of economy and innovation from 2005 until last year, who largely masterminded the transition, adding, “Politicians must take tough decisions.”

Still, aggressive national policies to accelerate renewable energy use are succeeding in Portugal and some other countries, according to a recent report by IHS Emerging Energy Research of Cambridge, Mass., a leading energy consulting firm. By 2025, the report projected, Ireland, Denmark and Britain will also get 40 percent or more of their electricity from renewable sources; if power from large-scale hydroelectric dams, an older type of renewable energy, is included, countries like Canada and Brazil join the list.

...

If the United States is to catch up to countries like Portugal, energy experts say, it must overcome obstacles like a fragmented, outdated energy grid poorly suited to renewable energy; a historic reliance on plentiful and cheap supplies of fossil fuels, especially coal; powerful oil and coal industries that often oppose incentives for renewable development; and energy policy that is heavily influenced by individual states.

The relative costs of an energy transition would inevitably be higher in the United States than in Portugal. But as the expense of renewable power drops, an increasing number of countries see such a shift as worthwhile, said Alex Klein, research director, clean and renewable power generation, at IHS.

“The cost gap will close in the next decade, but what you get right away is an energy supply that is domestically controlled and safer,” Mr. Klein said.

---

This post originally appeared on Alex's personal blog OpenAlex.

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Comments

The NY Times article lacked due diligence in the investigation of the comparative rise in the cost of energy in the United states during that same period, which was about 25 - 30%. Meaning that the Portuguese model would have saved billions of dollars to American Tax Payers. On average, Energy costs in the U.S, have been rising at a rate of 5% per year, so you do the math. The Portuguese energy model is without doubt a success whichever way you grid it.


Posted by: Mattus on 16 Aug 10

The NYT article also downplayed the environmental impact of hydro dam construction - the Alqueva Dam itself flooded one of the few remaining ecological pristine areas of Portugal, approximately the size of Rhode Island, displacing thousands of farmers and rare avian and bat habitat. Looks like EDP's PR machine is doing a good job of disguising a wolf in sheep's clothing.


Posted by: Clare on 17 Aug 10

A very biased story. For a portuguese interpretation, please see my reply at http://ecotretas.blogspot.com/2010/08/portugal-new-york-times.html

Ecotretas


Posted by: Ecotretas on 18 Aug 10

My question would be how has the privatisation of energy and the price increases affected low income users? How many have been forced off the grid (and not in a good way)?


Posted by: Alexis Scholtz on 18 Aug 10

The current average costs of renewable energy is unlikely to be more competitive than wholesale electricity/fossil fuel prices. Especially with privatization of utilities co, there should be some increase to tariff so that these co can quickly recover their investment....which in turn will impact utility bills. Hopefully the govt will work to keep the tariff low. In the long run, it should be good for the environment and us.


Posted by: John Smith on 18 Aug 10

Mattus, that's a good point. Energy prices from all sources have been climbing recently so using rising rates to argue against renewables is a red herring. The hope, of course, is that a diverse renewable energy system will be protected from cost spikes associated with the price of fossil fuels.

Alexis, I think you are right to be worried about issues around energy rates and the burden they place on low income families. But if rates in general are rising, there is no reason to target privatization of generation as the main culprit.

Privatization coupled with smart government regulation can produce good results. Its definitely not as simple as just "privatize and let the market look after itself." Anyone who says privatization is a silver bullet is either uninformed or wants to sell you something.

Ecotretas, thanks for digging into the statistics on this. I read your post. Could you clarify what you mean by "directive values."


Posted by: Alex Aylett on 18 Aug 10

The NYT made two critical mistakes that completely change the meaning of the article:

- Portugal does NOT produce 45% of its electricity from renewables but of the energy that it produces domestically by all means (including from fossil fuels), which is only 17%, the government says that 45% come from renewables. That means that Portugal actually has only 8.5% of its electricty from renewables. Big difference...

- The 45% figure comes from a government estimate, the European Union, independent energy experts and even the association that supports renewable energy in Portugal puts this number in 34% in 2007. The 45% figure came from a gorvernment press release on an election year and has NEVER been verified (notice that the article gives a link for 2007 number but no source for the 45% figure)

- Why not talk about countries that have verified renewable energy production close to 100%, like Costa Rica or Iceland? We need good exemples for renewable energy policies

I HOPE WORLDCHANGING CORRECTS THIS POLITICAL GREENWASHING PROPAGANDA.


Posted by: Nom_de_Guerre on 19 Aug 10

* in the first paragraph I meant that the electricity produced domestically is only 17% of total consumption (from all means)


Posted by: Nom_de_Guerre on 19 Aug 10

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