Government approves giant investment plan for renewables

The Portuguese government has approved a EUR 5000 million investment plan to promote renewables and energy efficiency. The plan, which is yet to be rubber stamped, raises the country's existing renewables tariff of PTE 12/kWh (EUR 0.06/kWh) by up to 30%. The government also hopes to publish a grid regulation bill by the end of the year, aimed at tackling the problems of grid saturation and lengthy processing of connection applications. The new tariff for wind power is based on a sliding scale which over a whole year works out to PTE 13.19-16.50/kWh. All plant receive PTE 16.5/kWh for the equivalent of up to 2000 hours of full load production -- the effective period for which a turbine has run at its rated capacity. The tariff drops progressively after 2000 equivalent hours, levelling off at its lowest rate for a turbine on a site with excellent winds which runs at full load for more than 2800 hours or more a year. As Portugal's largest wind resources are mainly in environmentally sensitive high ground areas, "the plan makes lower wind speeds more economically viable, therefore reducing impact," says Marc Groves-Raines of developer Renewable Energy Systems (RES). "This, together with grid regulation, should also speed up connection," he adds, explaining that lower ground is closer to inhabited areas with better electricity infrastructure. Another of the plan's main features is its upholding of interest free loans for renewables projects. Economy minister Luis Braga de la Cruz expects wind to be the main beneficiary of the government's boost to renewables, given the industry's "large growth potential." The Portugal renewable energy association, Associação Portuguesa do Productores Independentes de Energia Eléctrica do Fontes Renováveis (APREN), welcomes the tariff hike, but criticises the rate at the bottom end of the scale, which is lower than the costs avoided by a utility in not having to buy power from another source. APREN estimates Portugal will need a total of 2000 MW of installed wind capacity to meet the government's commitment for renewable to provide 21.5% of the country's electricity mix by 2010.