The Portuguese legal framework on utility-scale energy storage technologies

Tiago Corrêa do Amaral

Abreu Advogados, Lisbon

tiago.c.amaral@abreuadvogados.com

Catarina Miguéis Picado

Abreu Advogados, Lisbon

catarina.m.picado@abreuadvogados.com

The European Commission’s European Green Deal has established the roadmap for reducing emissions by at least 55 per cent. Renewable energies are inevitably vulnerable to variations in availability, since the sun and the wind cannot be programmed. Energy storage is therefore essential if EU targets are to be met.

Portugal’s installed energy storage capacity is still predominantly based on hydro pumping, which currently stands at 4,164 GW year.[1] However, this paradigm is about to change with the democratisation of energy storage solutions through wind and solar production.

Storage solutions other than hydroelectric production have been included in the electricity sector legislation since 2019. They have also been considered in competitive procedures for the allocation of injection capacity in the public electricity service network (RESP) or for the purposes of graduating the projects in agreements with the network operator.

The new Legal Framework for the National Electricity System approved by Decree-Law No 15/2022, established a general legal regime applicable to the licensing of these facilities, together with a few specific rules for storage.

A storage facility can take two different forms: (1) autonomous storage, where the facility has a direct connection to the RESP and is not associated with an electricity power station or a Production Unit for Self-Consumption (UPAC); or (2) associated storage, where the installation has no direct connection to the RESP and is associated with a power station or a UPAC.

Between 1 January and 31 October 2023, 35,152 GWh of electricity were generated on the Portuguese mainland, of which 67.8 per cent came from renewable sources.[2] The storage will be decisive for the long-awaited energy transition.

The installation of power stations with storage or an autonomous storage installation requires a licensing process with several stages. These are:

• Environmental analysis

Projects with an installed capacity above 50 MW, or above 20 MW when located in sensitive areas, are subject to an Environmental Impact Assessment or an environmental impact analysis procedure when, regardless of the installed capacity, are located in sensitive areas.

• Production licence for installed capacity above 1 MW.
• Prior registration for production with an installed capacity of more than 30 kW and equal to or less than one MW and autonomous storage with an installed capacity of less than one MW.
• Municipal control

The construction of power stations or storage facilities is subject to obtaining a construction permit.

• Connection to the RESP

RESP connection infrastructures are built at the developer’s expense.

• Exploitation licence

This must be applied for within one year of the date of issue of the production licence, with the possibility of an extension for a further year.

• Exploitation certificate

This must be requested within nine months of the date of issue of the prior registration, with the possibility of a single extension for a further half of the initial period.

The National Energy and Climate Plan 2030,[3] which puts in place Portugal’s energy and climate policy establishes a set of ambitious targets for the period 2021-2030. Among the measures defined, the following stand out:

• reducing greenhouse gas emissions by between 45 and 55 per cent, with reference to emissions in 2005;
• incorporating 47 per cent of energy from renewable sources in gross final energy consumption;
• a 35 per cent reduction in primary energy consumption; and
• an increase in the installed capacity of renewable energy sources to 28.8 GW compared to 11.8 GW in 2015.

Although the country has been a pioneer in implementing specific legislation on storage, the lack of capacity for injection into the RESP, along with the lack of definition and delays in publishing the capacity available for obtaining the Grid Injection Capacity Reservation Title, have hindered the development of autonomous storage projects of more than 1 MW.

In order to make a real commitment to develop storage projects, it would be desirable to establish a swift, transparent and predictable criteria for the allocation of reserve capacity in the RESP, notably by approving a strategy for storage with specific timelines to launch injection capacity allocation procedures. Until that happens, developers will have to wait for the publication of the available injection capacity quotas.