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Portugal – Facing the Sun

If Britain was the first industrial country, Portugal was the first ‘international’ country, albeit a small one but in the right geographical position at the right time and with less than a million people. Portugal discovered the first route to the East Indies by sea  and explored a new continent to the west.

In Roman time, Portugal was the most westerly province of the empire, a remote province  like Britain at a time when the world was divided and the Mediterranean was the centre of the classical world and not the neighbouring Atlantic Ocean.

Portugal has two ‘climates’ – the north has a temperate Atlantic climate similar to western Britain while the south has a typical Mediterranean climate and so attractive to the Romans.

Portugal – A Divided Climate

In the early middle ages Portugal was dominated  by the Andalusian Arabs but in 1139 Portugal secured its independence and as trade began to move beyond the Mediterranean ironically because the old empires and the Crusaders were defeated by the Ottoman Turks.

Europeans were pushed back into continental Europe and their traditional trading routes to S.E Asia and India were blocked by the Ottomans so they had to look to the Atlantic as an alternative. The Portuguese invited Genoese sailors to look for alternative routes along the African coast. They were aware of the Canary Islands as long ago as the mid 14th Century  but no attempt was made to navigate until 1415 when the young prince Henry the Navigator financed Genoese navigators to explore the coast and by 1431 they had discovered the Azores and Madeira as well as the Canaries. In the following years they followed the coast of west Africa and down to the Congo river and eventually Vasco De Gama navigated around the Cape of Good Hope into the Indian Ocean so proving a new, easier route to the East and India.

Soon this small country of less than a million people had established colonies in India, China, Africa and South America(Brazil) and dominated the trade routes to Asia. Portugal had the first global empire and their cultural impact remains to this day in all their old colonies. By the 17th Century they were already in decline and disease, the Lisbon earthquake in 1755 followed by the Napoleonic Wars all made Portugal a backwater once more.. This was further accentuated when Brazil became independent in 1822. 

In 1910 there was a revolution and a republic was established but the country was drained by the First World war and this led to a Fascist dictatorship which survived the second world war and did not end until 1974 when the Carnation Revolution established democracy.

The country is now an advanced economy, with a GDP of $358 billion, a member of the UN (Director General is Portuguese) , the EU and NATO. Even though a small country Portugal has played a prominent role in the EU from which it has benefited enormously.

 The country is 92,000 km2 iin areea somewhat smaller than the UK with a population of just 10,276,000 and falling rapidly – typical of much of mediterranean Europe. Half of the population lives in the two largest metropolitan areas of Lisbon (3 million) and Oporto (2 million). Both cities and others  continue to grow so a majority of the population now live in urban areas. Per capita income is Euros 32,000. Most commercial and industrial activities are confined to the two largest cities. Much of the traditional economic activity remains including cork, wine and port, footwear and furniture – much of it owned by IKEA. Agriculture is also important accounting for 4% of GDP and includes grain crops, cattle, citrus, olives and grapes.

Mining too is important and includes tungsten, tin, uranium and copper. There are also vast resources of lithium – Europe imports 20% of world production so Portugal is an important contributor and this will grow.

Modern industry includes motor manufacturing and  aerospace with Peugeot,VW  and Airbus having a presence.

Tourism is a major industry in the southern Algarve region and Portugal is the 20th most visited country.

As with many modern states the presence of science parks have attracted hi tech industry, pharma  and software employing a highly trained workforce.

In 2017 the energy combination was 30% hydro; 27% gas; 22% wind and others including solar just 1% In 2020 the targets are 23% wind; 22% hydro; 5% biomass; 2% solar and 2% CSP.

Hydro suffered a major reduction in 2017-2018 because of drought and drier climate is likely to be more prevalent in the future. Wind is a major power source given Portugals position facing the full force of Atlantic storms and prevailing westerly winds. In 1988 there were just 60 mW of wind but this has grown to 4,525 mW.

      Portuguese Wind Farm

Consumption of power has actually dropped from 309 TWhrs in 2004 to 253 in 2013 despite a rise in production from 45 to 67 GW. Over the same period imports mainly from Spain have fallen from 265 to 200 TW hrs.

The back up power supporting the grid comes from natural gas imported through a pipeline from north Africa (Maghreb Gas).

Nevertheless Portugal  is one of the foremost countries in the generation of renewable energy. The target for 2030 is 80% leading to 100% renewable by 2050. In August 2019 67% was generated from renewables while in December the figure had risen briefly to 77.2% although overall target for 2020 is only 31%

Currently solar accounts for just 1.6 % of grid power, up from 1.4 in 2017 and with more than 3,000 hours of sunshine- Portugal has ambitious targets. The current target is 1500mw matched by an investment of Euros 650 million in solar and wind.

                    Solar Park – Portugal

Portugal is also keen on exporting energy and believes it can make an attractive profit investing in renewables. In 2018  5.7 TWhrs was exported with a value of Euros 35.3 million as against imports of onl Euros 2 million.

Despite the targets there are problems especially for the smaller producer. Portugal has alot of bureaucracy and for installations of up to 1 mW the investor has to have an operating certificate and licence under RESP (Public Services Energy Activity). This applies principally to investors shipping all their production to the grid.

EDP (Energias de Portugal) undertakes ‘auctions’ for investors to bid for grid access. At recent auctions the DL nº 153/2014e has been a take up of 90% – 1400 mW in 2019 and another 700mW in January 2020.

The other solar category is ‘Offgrid’ favoured by foreign expatriates especially in the Algarve (southern Portugal) who want to be offgrid most of the time with access to the grid or be totally offgrid and cover any risk by attaching a generator to their system. Both users are known as ‘prosumers’ and since a new law was passed in 2015 ref DL nº 153/2014 allows ‘prosumers’ to install offgrid systems and still sell excess production to the grid without a grid licence. More than 3,500 systems have been installed since 2015 and it represents an attractive investment with a payback of about 8 years. Previously all solar systems whatever the their size had to sell 100% of their output to the EDP grid and buy back power at a much higher price. Currently the grid price is Euro Cents 22.46  which makes offgrid an attractive proposition but EDP do not pay the same price for surplus energy. Currently its 90% of the iberia renewable market price.

Typical Solar Installation – Algarve

Most of the Algarve solar installation kits are shipped from the UK and there are 3 or 4 companies shipping most of the supplies. The UK company ships the system and the buyer has to find a local company to do all the installation including mounting of the panels. The supplier describes the systems as ‘pre made ready to install’. See below a typical advert for a pre made system.

‘Our systems include: Solar Off-Grid Inverters with MPPT Chargers, Solar Panels, GEL Batteries and OPzS Flooded Batteries. We also include in the package mains and control cables and PV cables for outdoor use.  There are also DC and AC breakers that allow the Users to disconnect the power from the solar system for regular maintenance and repairs.’

There would appear to be a major and growing market for semi commercial systems that allow the client to operate 100% off grid and use a generator to top up the batteries. For such systems the life can be expanded from less than 10 years to almost 20 by using Lithium Phosphate batteries. The market can include users in Lisbon and the more temperate part of the country in the north, as well as the expat community in the Algarve many of whom operate businesses connected to the tourist industry. Most of the expat community is from Britain, Germany and Scandinavia. Many have residences in both Portugal and their home countries.

Most of the expats are confined to the warmer Mediterranean region in the south and represents a real opportunity for selling offgrid systems including solar containers both 10 foot snd 20.

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