Portuguese market not easy to crack -- Tough politics and bureaucracy

Grid connection and bureaucratic issues are holding back wind development in Portugal, claims the country's biggest independent developer, Enersis SA. If the country does not develop an integrated strategy soon, Portuguese wind will be stunted in its infancy, he says.

Portugal has an encouraging tariff for investors, about PTE 12/kWh (EUR 0.06/kWh), says Henrique Pires de Almeida of Enersis. "If these were the only main issues, national installed wind capacity would grow from today's 80 MW to some 500 MW in a matter of three years," Pires de Almeida says.

But restrictions from Portugal's utility monopoly, Electricidade de Portugal (EDP), are complicating grid connection, he says. According to the law, wind plant may go on-line as long as maximum delivered power does not exceed 8% of minimum short circuit power. "Since [these] levels are not really known outside EDP, these values can be lowered for specific convenience," claims Pires de Almeida. He also asserts that EDP has filed a number of artificially inflated grid connection requests, in many cases from entities with no experience in project development, and that the utility now uses these figures to justify restricted access.

Understaffing, both in the state energy department, which is responsible for all project licensing, and others has also led to a procedural bottleneck, bringing further delays, Pires de Almeida says. And once state administration obstacles are surmounted developments face a final hurdle: municipal construction licensing. "Municipalities presently expect either hefty compensation or a share in development projects," he says. He adds that the fee for land use rights for common land in mountainous areas has risen substantially.

Pires de Almeida's main apprehension is that politics will get in the way. Even projects in very late stages of development have been brought to a halt under political conflicts between opposing parties.

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