- Portugal is one of those countries with no indigenous fossil fuel production and the cost of energy imports weighs on its balance of trade that has until recently had a large structural deficit.
- With no nuclear power either, the only indigenous primary energy production is from hydro and wind power which now accounts for 20-25% of all primary energy consumed and between 40-50% of electricity production which is a fair achievement.
- Growth in renewables has had a positive impact upon the balance of trade that is approaching balance for the first time since 1970.
- I’m hoping that my Portuguese friend Luis may describe in the comments how 4.4GW installed wind capacity impacts the Portuguese landscape, how the grid copes with intermittency and how electricity prices and subsidies impact consumers.
Figure 1 Annual production of renewable energy in Portugal has increased 6 fold since 1965. Note the large inter-annual variation in production that is down to the weather. Wet and windy years produce more renewable energy. Data from BP .
Portugal was once one of the most powerful imperial nations on Earth. But with the fall empire and with a military dictatorship it was marginalised together with Spain for much of the 20th Century. Modern day Portugal was born with EU membership in 1986 and the country is now considered to be a mature western democracy although the legacy of its past means that Portugal is not yet as wealthy as European neighbours to the North. In the lead up to the financial crash of 2008, the country had blown an enormous property bubble, based in part upon climatic migrants from Northern Europe, and the country has been hit extremely hard by the ensuing crash (Figure 2)
The population has grown slowly since 1980 and now stands at 10.6 million. Population growth has now all but stopped. The country has recorded solid GDP growth since 1970, even before EU membership, but GDP growth stalled in 2002, long before the financial crash, and per capita GDP today remains unchanged to a decade ago (Figure 2). No wonder Portugal has severe economic problems.
Figure 2 Population and GDP in $US (2005) from the UN 
Figure 3 The pattern of energy consumption in Portugal bears witness to a number of energy transitions, one of which is recent introduction of wind power. Data from BP .
In line with economic growth, Portuguese energy consumption increased 5 fold from 1965 to 2000. But since then energy consumption has stalled and now seems to be in decline (Figure 3). As we shall see below, Portugal has highly correlated energy consumption and GDP. The energy consumption data tell an interesting story. Coal was introduced to the mix around 1986, presumably for power generation and then gas in 1998. Gas subsequently displaced some coal, and gas, coal and renewables together has led to a significant fall in oil consumption. Presumably oil was previously used for power generation.
Figure 4 Hydro and renewables production is assumed to be consumed within Portugal, therefore the energy balance of imports comprises only the fossil fuels.
The rapid rise in fossil fuel imports to Portugal since 1965 underpinned the country’s structural trade deficit (Figure 7). The subsequent fall in imports since 2005 may in part be attributed to indigenous renewables production but also to economic stagnation. It will be interesting to watch in future to see if Portugal’s economy can begin to grow without sucking in more fossil fuel imports.
Figure 5 Portugal’s renewable production recently peaked at over 25% of total energy consumed in 2010. The subsequent decline is down to drier, less windy weather. Notably, Portugal’s renewables production was over 25% in the mid 1960s and so today’s achievement takes Portugal back to where it was 50 years ago.
Figure 6 Electricity generation and consumption has been fairly flat since the late 1990s. The renewables share peaked at over 50% in 2010 and conventional thermal producers must be in a world of hurt. Note that solar is insignificant in sunny Portugal, which I find surprising.
Figure 7 The impact of fossil fuel imports on Portugal’s trade balance is plain to see as is the recovery in the trade balance since 2008, albeit in a shrinking economy. The cumulative deficit since 1970 is $319 billion, 1.7 times current GDP.
Figure 8 Per capita GDP (in constant 2005 $) more than doubled from 1970 to 2000 and Portugal was on its way to becoming a wealthy country until recession struck around 2002. Variation in economic output is almost matched exactly by variation in per capita energy consumption (Figure 9).
Figure 9 Per capita GDP and energy consumption have increased almost linearly and with a gradient close to one. The ongoing recession threatens to take Portugal back to its past. Much of the growth may have been underpinned by debt, and repaying debt is one way of returning to the past. The small decline in GDP per toe shows how hard it is to improve economic performance without increasing energy unless you have phantom GDP like we have in the UK (Figures 10 and 11) .
GDP, GNI and Energy Overview
Per capita GDP versus per capita energy consumption is plotted in Figure 10 and per capita GNI PPP (gross national income, purchasing power parity) versus per capita energy consumption in Figure 11. The GDP data from the UN are in chained $US 2005. This measure introduces distortions linked to exchange rates and the internal functioning of different economies, especially those of the former Soviet Union. The GNI data from the World Bank (WB) given in current international $ is supposed to correct for these distortions. The jury is still out as to which data set is best to use. On these charts, the data sets are time series starting in 1970 for GDP and 1980 for GNI and normally progressing from lower left to higher right as economies grow with time and energy consumption grows to fuel the economic growth.
Portugal sits together with Egypt and Turkey but has progressed to a higher level of per capita income than both. The trend defined by these countries is an energy efficient one. I suspect this in part reflects lower income levels and citizens are not wasting energy for leisure purposes to the same extent as occurs in the UK and other wealthier countries. There are also physical geography impacts upon energy use, the Mediterranean countries not having to spend so much on winter heating and likely too poor to have widespread air conditioning in summer.
A notable feature on the GNI chart (Figure 11) is that since Portuguese energy consumption and GDP growth stalled 12 years ago, GNI is deemed to have continued to rise phantom like the UK.
Figure 10 Per capita GDP and Energy. Data from the UN  and BP .
Figure 11 Per capita GNI and energy consumption. Data from the World Bank  and BP .
Portugal’s experience with renewables, especially wind, may indicate that blanket condemnation is misplaced. Much will depend upon how well citizens and industry can afford to pay the bills. And how will corporations cope with ongoing phasing out of fossil fuel based generation? With all the Green talk of deploying solar farms in the Sahara Desert, I’m surprised that solar has not been more widely deployed in this sunny country. Portugal will be an interesting country to watch in the years to come. If it ever recovers from recession will it start to suck in more fossil fuel imports, or may growth be founded upon increasing supplies of renewables?