Portugal - Austerity measures halt near-future wind growth

PORTUGAL: Prospects for the Portuguese wind-power market were hit by the so-called troika of institutions - the International Monetary Fund, European Investment Bank (EIB) and European Commission - demanding austerity measures in return for a financial rescue package last year.

A spokesman for the country's new conservative government, which was elected last June, says that tariffs in support of new wind-power projects will be revised. "This is not immediately relevant because there are no new projects anyway, as the licensing of new wind-power projects is suspended," he adds. A government decree on 5 January suspended licensing as a direct result of the troika agreement.

There is no clarity on whether the moratorium on wind-power support will last for the whole three years of the troika agreement. The government says this year's targets of completing the installation of the 2GW already awarded and achieving 8.5GW by 2020 are still valid.

Industry sentiment can be gauged by the decision last February by Martifer, a partner in the Ventinveste wind-power consortium, to diversify out of tower construction and wind-farm development. "The big picture for wind is not easy, which is why we took the strategic decision to concentrate on core solar and construction activities," a spokeswoman says.

The political climate has also worsened for the interests of the wind-power industry and the renewables sector as a whole. At the end of January, a group of politicians and industrialists led by multimillionaire Patrick Monteiro de Barros relaunched an old campaign under the title of "A Manifesto for a new Energy Policy" designed to persuade the government to consider the option of developing nuclear power. The lobbying effort also seeks to delegitimise as ruinous the financial support previously given to wind power.

The Portuguese renewables industry association, Apren, acknowledged that no new procedure for wind-power concessions is expected in the near future. Before any new tenders can be issued, support schemes and the market integration of wind power - including issues of pump-storage capacity - have to be defined, the spokeswoman added.

The Eneop consortium - made up of German turbine manufacturer Enercon and four Portuguese developers, Neo Energia, Finerge, Generg SGPS and Sonae - is scheduled to complete by next year the installation of the 1.2GW it was awarded in 2006. Since the initial 816MW was installed, funding has become a problem. Partners EDP, Enel and Generg invested EUR500 million of their own capital to keep the project going. Eneop requested a EUR350 million loan from the EIB, but only EUR276 million was forthcoming last December.

Ventinveste, headed by Galp and Martifer, was awarded 400MW by the government. Its Vale Grande wind farm has been in operation since last August. According to a Ventinveste spokesperson, a further 168MW is awaiting financial closure and 34MW should receive licences before the end of 2012.

Alongside the credit crunch in Portuguese banking and the announcement of tariff revisions, the wind-power sector is also affected by higher municipal rates and a tax on environmental impact. According to Apren, the licensing procedure continues to be the main bottleneck, mainly as regards environmental aspects. The association has urged implementation of a one-stop shop and reform of the environmental impact assessment committee.

Last year, however, Portugal's wind-power performance was strong. At year-end 4,291MW had been installed. The amount of new capacity added last year was 393MW against 358MW in 2010.

Offshore, the government spokesman said future development will depend on the success of EDP's Wind Float pilot project. "Offshore wind would need to be a mature technology to get financing," he says.