€60Bn of renewables investment blocked in Portugal
A total of €60 billion in renewable energy investments is stalled in Portugal. The sector is calling for faster licensing processes to accelerate project implementation.
“Around €60Bn in planned investments remains stalled, primarily due to licensing timelines, insufficient grid capacity, and the absence of new auctions since 2022,” according to a study released this Wednesday by APREN (Portuguese Renewable Energy Association).
The study ‘Tax Burden on Renewable Energy in Portugal’ was conducted by the Nova School of Business and Economics (Nova SBE) and Lobo Carmona for APREN.
To realize these investments, the study advocates for reducing licensing timelines to under three years, “bringing Portugal closer to European best practices by simplifying procedures and centralizing the review process.”
Another proposed measure is the relaunch of auctions “with a predictable schedule, ensuring regulatory stability and greater visibility for investors.”
It also calls for increased “investment in the transmission grid, creating the capacity to integrate the additional 22.2 GW envisaged in national targets.”
Regarding taxation, the sector contributed €1.1 billion to the State in 2024, but this figure could double to €2.8 billion—specifically if the investments are unlocked.
“Each year of delay represents an estimated loss of approximately €1.7Bn in potential tax revenue for the State,” the report notes.
“The total tax burden borne by companies represents approximately 35% of their profits, even though the sector already pays an effective corporate income tax rate higher than the national average,” the document highlights.
A particular point of concern is the retention of the Extraordinary Contribution on the Energy Sector (CESE)—a “permanent levy on the net value of assets that penalizes investment regardless of project profitability.”
Consequently, “Portugal is currently the only European country that maintains a permanent levy of this nature on renewable energy producers, creating a tax framework that is more burdensome and less competitive than that found in other European markets.”
The renewable energy sector “generated €1.1Bn in Total Tax Contribution (TTC) for the State, representing approximately 1.16% of national tax revenue. In the same year, it contributed €5.34Bn to GDP, supported 62,434 jobs, avoided €2.1Bn in fossil fuel imports, and prevented approximately 11.7 million tonnes of CO₂ emissions.”
“The study shows that Portugal is currently a virtually unique case in Europe. Renewable energy is already a major contributor to the economy and public revenue, yet it remains subject to a tax and para-fiscal burden with no known parallel in other European countries. If we want to accelerate the energy transition, attract investment, and boost the country’s competitiveness, it is essential to align the Portuguese framework with European best practices,” said Susana Serôdio, Policy and Market Intelligence Coordinator at APREN.
The study advocates for eight priority areas to strengthen the sector’s competitiveness and accelerate the achievement of national decarbonisation targets:
• Eliminate the CESE levy, thereby removing a permanent taxation mechanism with no known parallel in the European Union;
• Reduce licensing timelines to under three years, bringing Portugal closer to European best practices through procedural simplification and the centralization of approval processes;
• Relaunch auctions with a predictable schedule, ensuring regulatory stability and greater visibility for investors;
• Increase investment in the transmission grid, creating the capacity to integrate the additional 22.2 GW envisaged in national targets;
• Promote long-term contracts (PPAs), reinforcing market mechanisms that provide price stability and facilitate project financing;
• Revise the electricity tariff structure, clarifying the allocation of Costs of General Economic Interest (CIEG) and energy policy costs;
• Clarify that production equipment or assets under concession agreements do not constitute taxable real estate;
• Enhance the redistribution of tax revenue generated by the sector to host communities, promoting a more balanced sharing of the energy transition’s economic benefits and ensuring fiscal equity for the sector vis-à-vis other sectors of equal importance.
Source: APREN
