Renewable capacity auction in Portugal

As part of Portugal's commitment to transition to a carbon-neutral economy by 2050, a strategy was developed for the 2030 horizon, based on the Energy and Climate National Plan 2030 (PNEC 2030), which sets the target of 47% of Renewables in gross final energy consumption.

To this end, and with the aim of significantly increasing the renewable installed capacity for electricity production in order to achieve national goals and objectives, the Government of Portugal has launched a tender for the allocation of 1,400 MW of reserving capacity for grid injection for solar power plants, through an electronic auction system.

The procedure adopted is competitive, simple, open, transparent, fast-track and electronic and represents an inversion of the licensing administrative cycle paradigm for power plants, given that the title of reserving capacity for grid injection works as a precondition to start the process to get the production license.

In a strong demand scenario for production licenses and shortage of grid reception capacity, auctions are the best way to fill this demand, accelerating investment in new capacity, giving priority to projects with lower costs and greater execution guarantees, allowing a better articulation between the licensing process and investments in new grid capacity.

In this case, an “ascending clock” auction was chosen, in which the bidding base price corresponds to the value of electronic auction first bidding for each available remuneration scheme

Guaranteed remuneration, whose prices correspond to the discount, in percentage, to a given reference tariff expressed in €/MWh
General remuneration, whose prices correspond to a contribution, in €/MWh, due to the National Electric System (from Portuguese Sistema Eléctrico Nacional – SEN)

The bidders’ offers for the auction in the two remuneration scheme will be converted into the net present value (NPV), expressed in €/MWh, for comparison and evaluation purposes. A simulator that allows competitors to compare a priori different bids in both schemes is available.

These remuneration schemes prevail for 15 years counting from the beginning of the operation of the power plant, after which the general remuneration scheme applies to the power plans under the guaranteed remuneration scheme, and the contribution to SEN ends to the power plants under the general remuneration scheme.

The application submission for the procedure implies provision of a security deposit of 10,000€/MW. The winners should provide a final security deposit of 60,000€/MW in 5 business days maximum, counting from notification date.

Deadlines were set for licensing, construction and operation of the power plants, namely:

Land rights acquisition: 6 months;
Production License acquisition:
- Subject to EIA or Environmental Incident Analysis: 18 months;
- Non subject: 12 months;
Acquisition of license or admission of prior communication for urban operation: 24 or 18 months;
Operating License acquisition: 36 or 30 months;
Start of Operation: 30 days after operating license issue.

Non-compliance of these deadlines determines imposition of penalties that may go to a loss of 25% of the security deposit provided or loss of the capacity injection reserve assigned under the procedure.

Additional technical information is also available, namely:

List of connection substations with identification of the voltage level and the time availability of reception capacity, for each of the admitted lots for auction;
Global solar irradiance maps in Continental Portugal, by region, with indication of the connecting substations that integrate admitted lots for auction.

To know more about the auction and download all the documentation click here.