Power and Renewables sector in Portugal
Final energy consumption in Portugal has increased dramatically since 1990 (80% increase since the 90’s), mainly due to increases in the consumption of the transport, industrial and commercial sectors and, although electricity generation has also increased significantly in the last 20 years, Portugal is still highly dependent on external energy suppliers, with 74.6% of its primary energy being imported in 2010, according to a World Bank report published in 2012.
Portugal relies on foreign imports of fossil fuels with oil representing 81,8% of total imports (most to be used on the transport sector), natural gas accounting for 13,0% and coal for +3,0%. Electricity remains at 2.2%.
The renewable sources of energy have taken in the last decade a key role in the national electricity mix, especially with the increasing number of wind farms and small hydro plants in the Portuguese territory. In fact, renewable energy in Portugal was the source for 52% of the country’s electricity generation in 2010 – an increase of 28% in 5 years.
In 2011, Portugal had a total installed renewable capacity (biomass + geothermal+ hydroelectricity + solar + wind) of 8.810 Megawatts. Globally, the Portuguese renewable market ranks at 23rd for total installed capacity, just behind Argentina (9.230MW) and ahead of Colombia (8.789MW).
Overall prospects for UK suppliers within the Portuguese market are good, with the market open to foreign products, ideas and technology. Specific opportunity areas for UK companies are in the following two major projects:
Wave Pilot Zone (WPZ)
In October 2010, the Portuguese Government signed the Wave Pilot Zone (WPZ) concession contract with the Portuguese National Grid (REN). The Financing of the 1st phase of the wave pilot zone was recently approved with an investment of 15 million EUR which will be invested in the infrastructure of the WPZ, due to be completed by the end of 2013.
The 2nd phase of the Wave Pilot Zone will start in 2014 and will aim to attract projects at a pre-commercial stage and will include marine and offshore wind projects.
Following the success of the Aguçadoura Wind Floating turbine, EDP and Principle Power are looking for offshore expertise in order top start constructing and testing on a larger scale. EDP has already secured 27 MW to install their WINDFLOAT floating technology at the WPZ during the pre commercial stage.
EDP Renewable is also an active player of the offshore wind projects in the UK and 2013 is the year when they will be closing contracts with the suppliers for their projects in the UK.
Portugal as a Platform to other Portuguese Speaking Countries
In the wider context, Portugal is an important gateway into other Portuguese speaking countries like Angola, Brazil and Mozambique. Many Portuguese players active in this sector are currently internationalising to Portuguese speaking markets, inc. Angola. The Angolan government is keen to push the renewable energy agenda and will be investing massively in energy infrastructure. Most of this work will be led by large Portuguese groups, such as EDP (power utility); REN (Grid network), large renewable energy developers large construction companies, etc.
Getting into the market
Decision-making tends to be rather bureaucratic thus, some form of collaborative relationship with a Portuguese company is likely to be the best means of market entry. For standard, ‘off-the-shelf’ equipment, a licensing, distributorship or agency agreement may be sufficient, but for larger projects, some form of joint venture will be required.
Portugal is a family type market where local companies frequently ask for agency agreements on an exclusive basis. This is the most suitable arrangement if the potential agent has a large sales force and covers the whole of Portugal. The appointment of a distributor/agent will only be the first step. It is advisable to maintain a good relationship with them and keep them informed of all developments and modifications of your range of products. The Portuguese invariably prefer personal contacts, therefore regular visits to the market are as important as continuous support to the Portuguese company.
UK companies should aim to compete in the Portuguese market on price, quality or innovation (in equipment and commodity markets), or on standards of service and the ability to offer integrated, ‘packaged’ solutions (in service and contracting markets).
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.
1st Lusophony Energy Expo & Conference
06-08 June, Cascais – Portugal