Portugal To Raise The Price Of Electricity For Winning PV Projects
Oct 24, 2022
Portugal will increase the price of electricity for the country's solar tender winners in line with inflation, as the Portuguese government aims to ensure the economic viability of the projects.
A decree published this week said rising equipment prices and interest rates, combined with low bids in the tenders, made bank financing "impractical" for the projects.
Portugal signed 1.15GW of solar contracts in a 2019 tender with a minimum bid of €14.76/MWh, which was reportedly a world record at the time.
"It is clearly not feasible to finance a project at such an execution price," said Inês Gaspar, senior analyst at consulting firm Aurora Energy Research.
She told PV Tech that under every bidding model, including contracts for differences (CfD), contributions to the system and flexibility programs, the price of electricity for all winning bidders increases with inflation.
"The award date settlement price will be updated for inflation on the operating date."
In addition, project owners who are awarded contracts for difference through a tender will have an additional 12-month "trial period" before the start of the winning project, during which the project can be paid at market prices, which will provide a short-term increase in revenue.
According to the decree, the changes are in response to the EU's RepowerEU strategy, which aims to reduce the EU's dependence on fossil fuels, particularly Russian gas.
Portugal's decree states that the current environment and the unpredictability of its evolution "require the state to strive to significantly accelerate the energy transition through renewable energy projects."
Grapes is now ahead of its goal of generating 80% of its electricity from renewable sources by 2026, four years ahead of previous plans, and has exempted solar projects smaller than 50MW from environmental impact assessments.
Portugal's solar tender price for 2020 dropped even lower, when the winning bid was 670MW and Spanish company Enerland paid €11.14/MWh for the 10MW bid.
For floating PV projects, the 2021 tender ended with a negative price, according to PV Tech Premium, and the results indicated that bidders attached great importance to grid guarantees.
