Ph.D. Thesis: “Retrospective and Prospective Analysis of Policy Incentives For Wind Power in Portugal.”

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“Concerns over climate change impacts, goals to increase environmental sustainability, and questions about the reliability of fuel supply have led several countries to pursue the goal of increasing the share of renewable energy sources in their electricity grid. Portugal is one of the leading countries for wind electricity generation. Wind diffusion in Portugal started in the early 2000’s and in 2013 wind electricity generation accounted for more than 24% (REN 2013b). The large share of wind in Portuguese electricity production is a consequence of European Union (E.U.) mandates and national policies, mainly feed-in tariffs. Discussions on the appropriate policy design and level of incentive to promote renewable energy adoption and meet further renewable capacity goals are ongoing in Portugal, namely in what concerns the level and duration of feed-in tariffs that should be provided to independent power producers. This, in turn, raises the question of whether the past feed-in tariff levels were well designed to achieve the goals of a larger penetration of renewables in the Portuguese grid. The policies to induce wind adoption have led to a growth in wind installed capacity and share of electricity generated by wind in Portugal from less than 1% in 2000 to approximately 24% in 2013, but questions arise on their cost-effectiveness and whether alternative policy designs would have led to the same goal. vi The Portuguese wind feed-in tariffs are a guaranteed incentive which has varied between $85- $180/MWh over the last 20 years (ERSE 2011), and remained approximately constant since 2001 at $101/MWh. They are currently guaranteed for 20 years of production or 44GWh of electricity generation per MW installed (Diário da República 2013) – the longest period among countries with high wind electricity share. They do not incorporate any digression rate besides inflation, and are guaranteed for every unit of electricity fed to the grid. There are no power plants that have already been decommissioned despite being in operation for more than 20 years, favoring from new, detailed and hard-to-follow agreements in the legislation. All wind parks that are currently in operation have received feed-in tariffs since they connected to the grid, and are expected to keep receiving them at least until December 2019, and up to December 2036 – depending on year of connection and agreement under the most recent legislation (Diário da República 2013). The 2020 renewable energy goals in Portugal include having 6.8 GW of installed wind capacity, which implies the connection of 2 GW in the next years. If no further grid investments are made and wind capacity increases up to 100 MW to the connection point that we analyze, total annual electricity spill is likely to range the 20% to 40%. If the connection grid policy is designed to allow for wind spill, already ‘occupied’ connection points will be available to new entrants, lowering the total investment costs for new wind parks and increasing their profitability. This thesis is divided in three main parts: a first introductory section, a retrospective study of wind power in Portugal and a prospective analysis of the Portuguese wind power sector.” [Continue reading]


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