Portugal to have 10 largest energy-related projects in Southern Europe worth €20Bn

Portugal is to have the 10 largest green hydrogen and other related energy projects in Southern Europe worth €20Bn over the next two years.

This is according to Portugal’s Secretary of State for Energy and the Environment, João Galamba who addressed a small but select group of entrepreneurs at a dinner organised by the American Club of Lisbon and FLAD – the Luso-American Foundation – which took place at Lisbon’s exclusive Eça de Queiroz literary and debaters’ club at the end of April.
The debate, which included guest speaker and US serial entrepreneur Jeffrey Mayer, Executive Chairman of the Oasis Charger Corporation and Soloman Energy, ands moderated by the ACL President, Patrick Siegler-Lathrop, was also attended by Luso-American energy entrepreneur Patrick Monteiro de Barros who is a proponent of nuclear energy.
Galamba said that Portugal was traditionally one of the European countries which always had the highest dependency on exported energy.
Portugal does has oil and gas, but has not exploited it, while the coal mines it did have, have long since been abandoned.
What it does have however, is sun, wind and water resources in the North. Its non endogenous energy source is gas which is imported and accounts, on average, for 40% of Portugal’s energy needs.
Portugal, Galamba explained was one of the first countries in Europe to develop wind power, but was a latecomer developing solar power. In fact, Portugal has less solar power in its energy mix than the UK and Belgium, but is now accelerating its programmes significantly by double and triple digits.

A Trilemma

“Traditionally, there is a trilemma in public energy policy: sustainability, affordability and supply security. Portugal is fortunate in that traditionally these three elements reinforce each other,” said Galamba.
For Portugal to manage thIS energy trilemma it need to do exactly what it is doing, but faster.
It was, he said, self-evident that renewables make sense simultaneously economically, environmentally, and in terms of energy.
“What we need now is more solar and wind. The immediate reply to the Ukraine crisis is to deploy more solar and wind energy because they will directly reduce our dependence on natural gas which we should be using only as backup”, said the minister.
A decade ago, renewables were not the cheapest way to produce energy. Today, however Galamba says they are the most cost effective way to produce electricity.
“We invested heavily in wind with fixed tariffs, which for many years represented a cost which was much smaller than some people say”.
Galamba pointed out that the reason why Portugal today has the lowest energy inflation in Europe after Croatia is because of renewables. “Fifty per cent of Portugal’s generation assets are from renewables, and half of that has fixed tariffs of around €80-90MWh”, he said.
“Prices are now over €200 MWh, so what was for many years criticised as expensive, is actually an insurance which protects Portuguese consumers, families and companies from price rises”.
The minster explained that in Spain, when the wholesale electricity prices rise €1, the Spanish pay €1 more. When it rises €1 in Portugal, the Portuguese pay less than 50 cents because “we have this insurance”.
Renewables, he added, that had been “vilified for many years as being a rich man’s excess”, that a “poor country like Portugal should not have invested in”, we now know it helping Portugal “sail through turbulent times”. “If we had more renewables, we would have an even easier time”, he added.

Government steps up renewables and sells on gas

In April, the Government approved a temporary decree-law that accelerates the deployment of renewables.
The minister sad that Portugal would use Sines to support other member states such as Germany through the transshipment of gas.
“The faster Portugal and Spain deploy renewables, the more gas will be available for that operation. The ports and storage are there. If we consume less, then it means there is more available for others. We are assessing the quantities that we can tranship and those amounts are quite high. We can export what we consume entirely. The more we deploy renewables, the more gas we will be a able to sell on to other EU countries”, Galamba explained.
Hydropower is also important. Both Portugal and Spain have severe water shortage problems. Deploying more solar and wind also helps to save water. “Ideally, we would only use our dams as a backup”.
“Before I was secretary of State for the environment I told the Portuguese Energy Association APE that it now had a vested interest in supporting solar because it is the best way to save water and gas”, said the minister.

Does Portugal need nuclear power?

Luso-American entrepreneur Patrick Monteiro de Barros, who has had a wide and varied career as variously, a shareholder and board member of Petropius, a director of Portugal Telecom, Petrogal and Vodafone Telecel, is one of the main defenders of nuclear power in Portugal.

Nuclear energy in Portugal is very limited and strictly non-commercial. Portugal has one 1 MW research reactor located in the National Nuclear Research Centre at Sacavém, which is in permanent shutdown state.
Further nuclear energy activities are not planned in the near future. Other nuclear activities include medical applications such as radiology, radiotherapy and nuclear medicine, as well as use of industrial radioactive sources.
In 1971, Portugal planned to build an 8,000 MW nuclear power plant to be completed by 2000.
Plans were delayed until 1995 when it was decided to not proceed with the project. In 2004, the government rejected a proposal to reconsider its decision. After the 1974 Revolution, projects for the construction of nuclear power plants have been shelved or dismissed by various governments.
Presently Portugal has no spent fuel. In September 2007, the core of the Portuguese Research Reactor (RPI) was converted from high enriched to low enriched fuel, all enriched uranium as well as all spent fuel has been shipped to the United States in the framework of the “United States Foreign Research Reactor Spent Nuclear Fuel Acceptance Program”. Liquid effluents produced in the RPI, as well as effluents of medical applications are stored locally, and later discharged in accordance with national law. Solid radioactive waste and discarded sealed sources are centrally stored in the national intermediate radioactive waste storage.
João Galamba is the latest Portuguese government minister who says Portugal doesn’t need nuclear energy, because it doesn’t make economic sense.
The only nuclear power stations that are cheap, are the “older and now redundant power stations that were heavily subsidised by governments in Europe”, he says, adding “there is not a single private project on nuclear because its not viable in pure market terms”.
Galamba say it requires insurance that only the State can provide, and is probably one of the most expensive ways to produce electricity.
“All projects currently being built will cost 6x than initially predicted, now costing easily around €15Bn. There is no new nuclear station providing energy for less than €100 MWh. Today, any renewable energy source plus storage is cheaper. Even when a nuclear facility is developed, it takes 10-15 years to build it”, he says.
And adds dismissively: “Nuclear has this characteristic that is unique. It is the only industrial area with decreasing economies of scale. What we are seeing is that when scaling up from a pilot, costs are not reduced, they increase and substantially”.

Renewables in US still in infancy

US serial entrepreneur Jeffrey Mayer, Executive Chairman of the Oasis Charger Corporation and Soloman Energy, said that in the United States each state is responsible for implementing policies on power, on the regulation of utilities, and delivery of natural gas and electricity.
He says there two federal government agencies under the Department of Energy which oversee policy for inter-state pipelines and the movement of electricity across state lines, but for the most part energy production and supply is left to individual states, including renewable technologies.
Some renewable technology has only recent got attention in the States, with private companies involved. In one business model, utilities allow homeowners to pay for the electricity that is generated by these utilities projects.
The second business makes electric vehicle charging stations. Both businesses would not exist were it not for private equity.
Mayer says that public policy in the US has been important for the development of these new technologies, by each state adopting renewable portfolio standards.
“Every state has set a goal variously to 2025-2070 state depending, by which they aim to have 100% of the electricity from renewables. Each year the renewables portfolio standard goes up, and each year the utility and electricity supplier must meet the minimum standard, or they will pay a penalty which is high enough to force them to invest in some of these renewable technologies, or buy on the open market. This in turn helps to increase the amount of renewable energy”, he outlines.
The second policy in the US which has helped to encourage renewable technologies is know as the investment tax credit which the Federal government adopted some years ago.
In the case of solar, for example, any investor who invests in solar gets a tax credit equal to 30% of the cost of that installation. So, if it costs US$ 100 to build, the investor gets a US$ 30 credit or refund on taxes. “Together these have helped to create an industry, but one that is in its infancy”, he says.

Portugal ahead of US in wind

Interestingly, Portugal is further along in wind than the United States. Portugal produces 5GW for 10 million inhabitants; the US produces 100 GW (1GW can provide energy for 100,000 people) for 350 million people. Per capita Portugal is further ahead.
The biggest producer of solar energy overall in the world is China, while per capita terms it is the Netherlands.
But the country where solar power accounts for the most usage (12%) as a percent of total electricity, is Honduras.
In the US 22% of power comes from renewables, and a third of that comes from biomass, while solar is just 2%. Eolic power only accounts for between 4-5% of electricity generation and nuclear power around 20%.
The interesting thing is that Texas will soon have more renewable energy than almost any other state (California takes credit for that, accounting for 30%) in the US, despite it being Republican.
California had a day when 95% of its energy needs came from renewable. Portugal did the same, but for four consecutive days in May 2016. But in some states, like Alabama, there are no incentives to use renewables, although it does use biomass and nuclear, and has reduced its dependency on coal dramatically, in favour of natural gas.
“Everybody today believes in renewable energy, not just because its green and more environmentally friendly, but because it happens to be economically viable and is the cheapest form of energy”, says Jeffrey Mayer.
The lone voice crying to the wind on nuclear, Patrick Monteiro de Barros, has always insisted that building nuclear power stations in Portugal is the way forward and that he could have done it a decade ago “without costing the Portuguese State a red cent”.
The man who headed Petroplus Holding said back in 2011 at a Finance Energy Forum in Lisbon that he could built one or two nuclear power stations in Portugal without charging the State, and famously said: “just give us access to the market, and then who has the nails for it, plays the guitar”.
10 years ago, Monteiro de Barros believed that if Portugal had two nuclear power stations it would be able to export energy to Spain and France. “If Portugal had invested back in 2011, it would have had a viable alternative energy source by 2025”. It didn’t. He has called for the debate with key energy figures to be reopened to discuss the nuclear option again. He was still crying to the wind at last month’s debate.
As to the current energy crisis caused by the war in Ukraine and the sanctions on Russia, Jeffrey Mayer said: “All of us are going to see prices rise. Even though oil prices are close to US$ 100 a barrel, nobody has confidence the price will stay there. We’ve seen boom and bust cycles and volatility in energy prices which continue to be the highest of any commodity in the world”.
And opined: “It is only a matter of time before we see everybody experiencing shortages, which means that as much as we want to back renewables, governments have to continue to find a way to back carbon fuels as well”.

Big-ticket investment in Portugal

João Galamba pointed out that the larger energy investments in Portugal are not current being made by energy companies. This was clear from investment earmarked for energy in the Portugal Recovery and Resilience Programme. In fact they are from Bondalti ( a chemical company) and Sonae (a multinational company with a diverse portfolio of business areas).
The data centre at Sines – a port with an oil and gas refinery — will be the largest private project of its kind in terms of investment in energy areas such as green hydrogen and lithium (which is also private and involves energy giant Galp) processing in Portugal since Autoeuropa. It will have the top 10 biggest industrial projects in Southern Europe over the next two years worth €20Bn.