About PV in Portugal

1. About PV in Portugal Luís Silva luis.silva@adene.pt Pedro Paes Pedro.paes@edp.pt Hybrid PV-Wind power plant of Cismalhas, Ourique (2000)

2. E4 Programme (Energy Efficiency and Endogenous Energies), RCM 154/2001 established specific goals concerning the use of RES for power (and thermal) generation, consistent with the adoption of the RES-E Directive, under which Portugal has to realise the target of 39% (incl. large hydro) renewable electricity production in 2010. PV: from 1,0 MW (2001) to 50 MW (2010). Renewable Energy Policy • Cabinet Resolution (RCM) 63/2003 • reinforces the specific goals on installed capacity by technology. PV: from 2,0 MW (2003) to 150 MW (2010).

3. Electricity from Renewables Electricity supply from RES (1995-2004) source: DGGE, 2005

4. E4 Programme RCM 63/2003 RES-E Wind Small hydro Biomass Biogas MSW Solar PV Wave Large hydro TOTAL (MW) In 2001 101 215 10 1 66 1 0 4.209 4.603 By 2010 3.000 500 100 50 130 50 50 5.000 8.800 By 2010 3.750 400 150 50 130 150 50 5.000 9.680 RES Policy Targets Electricity market

5. The main legal and incentive framework related with PV is: MAPE/PRIME programme which provides financial incentives, namely for energy efficiency and endogenous energies projects. Decree-Law establishing a range of favourable feed-in tariffs for RES electricity. Decree-Law defining the conditions regulating the awarding and management of grid interconnection points for Independent Power Producers (IPP). Decree-Law regulating the delivery of electrical energy into the low-voltage grid (micro-generation, including PV). Indirect incentives: VAT, custom duties, income tax Legal Framework

6. 1988 • First introduced by Decree-Law 189/88 • Tariff associated to utility prices (indexed to the grid voltage level tariff), ranging from 40 to 55 EUR/MWh • Fully changed by DL168/99 • New comprehensive formula, tariffs in the range of 40 to 75 EUR/MWh 1999 Feed-in Tariffs • Adapted by DL 339-C/2001 2001 • General increase in tariffs, differentiated by RES technology • For PV, ranging from 290 €/MWh (>5kW) to 500 €/MWh (<5kW) 2005 • Adapted by DL 33-A/2005 Now • Further adjustment in tariffs, depending on technology • For PV, ranging from 380 €/MWh (>5kW) to 540 €/MWh (<5kW) • Amended in April 2005 – D.R. 29/2005 (-17% for PV)

7. Feed-in Tariffs Current tariff formula (DL 33-A/2005) • Grid avoided losses • Monthly payment (€/kWh) • Inflation rate adjustment • Production period • RES Coefficient • Environmental contribution (0,0074 €/kWh) • Variable parcel – O&M avoided costs (0,036 €/kWh) • Fixed parcel – capacity credit (5,44 €/kW installed capacity)

8. Feed-in Tariffs Current tariff formula (DL 33-A/2005) • Z Coefficient, variable according to RES: • Wind - 4,6 • Small hydro - 4,5 (up to 10 MW), decreasing 0,075/MW (from 10 to 30 MW) • Solar PV - 35 (above 5 kW) and 52 (up to 5 kW) • Biomass - 8,2 (forest residues) and 7,5 (animal wastes) • Wastes - 7,5 (landfill) and 3,8 (incineration) • Others - 1

9. Feed-in Tariff evolution

10. Feed-in Tariffs Current tariff rates for PV Z Feed-in tariff above 5 kWp 35 0,31 EUR/kWh up to 5 kWp 52 0,45 EUR/kWh • For each MW of installed capacity, the tariff is valid for the first 21 GWh of production or for the first 15 years of production, whatever happens first !

11. PV in Portugal Source: IEA-PVPS PV installed capacity of only 2,6 MW (end 2004) market growth based on off-grid applications

12. Few grid-connected installations have been realised since January 2003: RE Demonstration Platform (Labelec-EDP): 1,4 kWp 2-axis tracking system + 1,4 kWp fixed system + hybrid PV (0,5 kWp)-wind system. Solar Energy in Schools: PV systems (15, 25 and 35 kWp) in 3 schools in Moura, Alentejo region. Solar Building XXI: the 1st building integrated (facade) PV system in Portugal. 12 kWp PV system installed in the new building of RE Dept. of INETI. S. Brás 5 kWp PV system. 1st installation licensed under the IPP law launched within E4. PV in Portugal but

13. Large PV projects, currently under development: World largest centralised PV power plant (64 MWp) in Moura. PV Solar Park of S. Domingos (40 PV systems, total: 116 MWp). No. of requests for grid interconnection points received: 471 PV systems > total power requested in 2004: 5,28 MWp More than 3 000 requests in 2005 PV in Portugal The PV market in Portugal is expected to grow significantly in the next few years, based on grid-connected applications, either small scale systems up to 5 kWp or medium to large scale systems, including multi-megawatt power plants.

14. PV in Portugal Requests for PV power

15. Reduced VAT rate • 12% tax applied for RES equipment • IRS (income tax) deduction • 30% of the investment, up to 728 EUR PV Investment Support Financial incentives • MAPE / PRIME (POE) Programme - investment subsidies to projects in the energy sector (RES and EE) under the 3rd Community Support Framework (QCA III, 2000-2006). • 40% of eligible costs (refundable in 12 years, with 3 years grace period) • Maximum eligible specific investment for PV projects: 3,500 EUR/kW Tax and fiscal incentives

16. Main expectations regarding the PV Policy Group project: Expectations • follow-up of “FORUM on RES in Portugal” (2002) • contribute to review PV activities, share information & exchange views and discuss future strategies in Portugal • contribute to the sustained deployment of the PV market in Portugal. • help to make the national ambitious target (150 MW in 2010) become reality !

17. simplifying the licensing procedures as well as the grid-connection regulations, especially in the case of small systems connected to the low voltage grid; development of building codes for PV building integration; implementing a national certification scheme on equipment and installers, aiming at a better quality assurance. PV in Portugal The major barriers to the widespread of PV in Portugal, namely in the built environment, have been identified and the following measures still need to be adopted: