Portugal – renewables to the rescue?

  • 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 [1].

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 [2]

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 [1].

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) [3].

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 [2] and BP [1].

Figure 11 Per capita GNI and energy consumption. Data from the World Bank [4] and BP [1].

Concluding remarks

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?

[1] BP: Statistical Review of World Energy 2013
[2] UN: National Accounts Main Aggregates Database
[3] Does the UK Economy Run on Energy or Hot Air?
[4] World Bank Data Indicators

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22 Responses to Portugal – renewables to the rescue?

  1. Patrick R says:

    ‘may indicate that blanket condemnation is misplaced.’

    Er, yes.

  2. Patrick R says:

    Sorry the above comment was a bit cute. Do want to applaud your open mind as shown by this post.

    And add that wind + hydro is a fantastic combination, whether in one country like Portugal or New Zealand, or across nations as in Scandinavia. And it isn’t a one way street. Yes Hydro ameliorates wind’s intermittency but wind does the same for hydro; both are intermittent but on such different cycles; daily and seasonal. Being able to store water whenever wind supply is high smooths the hydro water supply enabling both higher fuel security and asset efficiency.

    Additionally countries or regions that are long [Chile, NZ, Japan] or otherwise host a variety of weather systems simultaneously [and have adequate electricity distribution networks and processes], a geographical spread of wind farms provides inbuilt intermittency smoothing.

    • Euan Mearns says:

      Patrick, My friend Luis was getting a bit pissed off with my anti renewables stance, so I’ve softened the tone a little, was surprised to see how far Portugal had gone, but nothing has really changed. I’ve not checked the population density, but Portugal is quite large with a small population, making it easier perhaps to tuck wind farms away in places where they do not cause distress. I should add that most of the time the landscape impact of wind farms doesn’t bother me – I live in a city. But when I go to the country they are beginning to encroach. And “the lives of many have been ruined” by wind developments, which should not be ignored. Moving offshore is simply more expensive.

      Certain major issues remain: 1) how affordable are new renewables in Portugal, 2) how do you fund legacy FF generators who are being driven out of business 3) how do you balance the grid, 4) how dependent is Portugal on connectivity with Spain to keep grid balanced and so on.

      Portugal could achieve self sufficiency in electricity with a couple of nuclear power stations. Is the renewables route really better and preferable? And if so, why?

      “a geographical spread of wind farms provides inbuilt intermittency smoothing”

      In Europe this is already proven to be negligible and should not be continuously dangled as an intermittency solution.

  3. Glen Mcmillian says:

    What chance has Portugal to get a couple of new nukes permitted and financed? I ask about permitting since I know nothing about Portugese politics.

    • Euan Mearns says:

      Without the will there will be no way. We used to be able to build space shuttles, Concordes and nuclear power stations but can’t any more. Have you any idea why?

      I think Sweden has a population about the size of Portugal and it runs exclusively on nuclear + hydro. In terms of its technology and industrial base , much more advanced than Portugal.

  4. Patrick R says:

    I don’t get this idea that because a system is balanced by supply from another country this somehow proves that renewables ‘don’t work’. Isn’t importing oil from another continent ‘balancing energy supply’ form elsewhere? Especially as you rightly point out these are small countries (Iberia, Scandinavia) so the efficiency of managing these communities together should be taken.

    Although I live in probably the last place on earth where any electricity will ever be imported (NZ). Where renewables work in a market completely without subsidy. And add to supply security by balancing the intermittency of our hydro systems.

    Incidentally I find windfarms to be beautiful, great sculpture. And I note the viewing places are always used, and that real estate companies advertise properties with ‘views of wind farm’ as an advantage, so I find this idea that they ruin the countryside or peoples lives overstated, to say the least.

    I certainly think you are right to point out Portugal’s scale as an advantage. It may be that one of the (many) unexpected outcomes of the energy transition will be the new found competitiveness of smaller economies. Look where we can see places that heading to 100% renewable generation; Iceland, NZ, maybe Portugal, Norway…)

    For these places the problem is liquid fuels. And in particularly for the transport sector. For these nations the electrification of as much of this sector as possible should be an urgent task. The global trend for increased urbanisation is certainly helping make electric transit systems more viable even in these smaller populations, and is in itself partly a response to the cost of oil, but these changes need to be pursued actively (and are not at a policy level here).

    Why not nuclear you ask? Because it is simply unaffordable. The ‘cost’ of intermittency is a better deal than the ‘prize’ of base load offered by this almost limitlessly expensive and dangerous technology. Of course the UK is in a very difficult place with declining indigenous primary energy supply. An ‘all sources’ policy looks needed to me, but that nuclear deal doesn’t look smart.

    Certainly everywhere attacking the demand side is urgent but also accepting that answers may be best found in distributed and highly localised supply.

    We will have to change distribution and financial models from the current systems inherited from the last century. And it isn’t just for windy and sparsely populated places. Big coal in Australia is running scared to their (retrogressive) government because what distributed solar is doing to their lazy rentier profits in those big sunny cities. We are transitioning out of necessity, what to is the debate. But to dismiss renewables because of intermittency shows a failure to approach the problem with vigour and an assumption that new sources must be identical in pattern to old ones.

    • Roger Andrews says:


      I disagree with almost everything Patrick says here, but he does make a couple of interesting points. First, that New Zealand is “probably the last place on earth where any electricity will ever be imported” (except maybe Greenland) and second, that wind power in NZ is unsubsidized. So if nothing changes we can expect that NZ wind will grow (or not) on its own merits. This makes NZ an interesting country to study from the energy standpoint. You might consider adding it to your list.

      Wikipedia has a dated but otherwise good article on NZ wind:


      • Euan Mearns says:

        NZ: BP 2012: 0.5 MTOE wind and 5.2 MTOE hydro.

        • Roger Andrews says:

          So in 2012 wind supplied 2.6% of NZ primary energy consumption (0.5 of 19.6 MTOE).

          We need to quantify wind contributions as percentages of primary energy consumption rather than as percentages of electricity generation. If you want to decarbonize your economy you have to decarbonize the lot, not just the electricity segment.

          And right now wind supplies only 0.9% of global primary energy consumption (118 of 12477 MTOE).

          • Patrick R says:

            Yes and at the beginning of the car age if you looked around all you’d see is streets full of horses… When discussing the future it is very easy to show that we aren’t there yet.

            The really interesting recent data from NZ is that we currently have the fastest growth rate in the OECD yet flat to falling electricity demand [and Vehicle Miles Travelled]. There are many renewable projects consented and ready to go [and no thermal ones] but because of the increases in efficiency now occurring because of technology improvements [eg LEDs], some policy [insulation grants], and price signal, demand is not growing. And in particular not growing in that classic 20th Century way; in lock step with economic performance. So investment in all forms of new generation has currently stalled.

            All of the generating companies plan to build more wind farms, because as mentioned above they balance so well with their existing Hydro assets. The countries biggest Thermal plant [Huntly] is being slowly mothballed. NZ will be 90% renewable this decade. The last ten percent may not happen for a very long time because these are co-gen plants typically at major dairy factories with strikingly high efficiency. As long as we have productive gas fields I suspect these won’t change.

            Rather than being wistful for last century’s system a more worthwhile project would be designing new financial systems that can operate well in the new disrupted electricity markets. Enough about NZ [so small it doesn’t really matter]. Here’s a fun problem from across the ditch:



            Australian Big Coal have got a headache; and it couldn’t happen to a nicer bunch of guys….

            The only constant is change.

          • Euan Mearns says:

            Patrick, The UK has 8.9GW installed wind capacity and 1.6 GW installed hydro. NZ has 0.6GW installed wind and 5 GW installed hydro. It is therefore impossible for the UK to balance wind against puny hydro. While in NZ all you have to do is to tweak your mighty hydro output to balance wind.

            Is it possible that high economic growth in NZ is linked to Christchurch reconstruction? Natural disasters are known to promote economic growth.

  5. Euan Mearns says:

    I agree the blot on the landscape argument is not a very strong one. But just because you find wind farms to be majestic does not mean you have the right to expect everyone to share that opinion.

    almost limitlessly expensive and dangerous technology

    It remains the case that there have been zero fatalities from the operation of civilian nuclear power. Which compares incredibly fairly with coal, oil and gas industries. The links below go to an anti-wind site. I don’t know how reliable they are, and there is a degree of comparing apples and oranges. Many of the wind accidents will be connected to construction, and I don’t if the oft quoted nuclear statistic includes construction and U mining – I very much doubt it.


    Nuclear is of course hazardous in a similar way to flying. Thus extreme care is taken on the safety side. Wind farms are perhaps more analogous to crossing the road that is much more hazardous than flying.

    • Glen Mcmillian says:

      I wonder what the people who are anti nuclear and anti renewable on the basis of costs really think coal and natural gas are going to cost in constant money ten, twenty, thirty, forty, and fifty years from now.

      A wind farm may need what we in the farming business refer to as a ”major overhaul” at twenty to thirty years but I I will hazard a guess that replacing the turbines and generators will cost only a minor fraction of the ” from scratch ” cost of a new wind farm.It is actually likely that this necessary heavy maintenance can be performed piecemeal as each unit wears out or goes down and paid for out of current operating revenues by then.Nukes have some expensive problems sometimes but they mostly run dirt cheap once built.

      I expect that solar, wind, and nuclear juice capacity put in place today with fixed financing will be very very profitable for the owners once the payments are over and maybe a long time prior to that.

      Now I not an economist – nor an engineer or accountant- but just to be on the safe side( sarcasm!!!) I have made an extensive search of the literature and I cannot find any verified instances of it raining oil or natural gas or hailing lumps of coal on this planet.

      Common sense clearly indicates that things that come out of holes in the ground must eventually run out and even a limited layman’s knowledge of where these things are to be found and of where national borders are located is enough to figure out that the haves are going to help themselves to some unwanted sex with the have-nots and they are not even going to pretend to be nice about it.

      Some of the have nots are going to be strong enough in the short to medium term to see the writing on the wall and when they do they will mobilize and invade some haves which are not able to defend themselves.The have not generals are going to say ” If we are going to do it we have to do it now while we are still able- before we are weakened enough by lack of affordable fuel that we cannot succeed”.

      The countries that are lacking in fossil feul resources of their own, or that will be forced into importing to supplement domestic supplies soon ,have no rational choice but to build nukes or renewables. The cost will simply have to be borne , just as the cost of non productive military power is necessarily borne.

  6. Patrick R says:

    You’re right Nuclear accidents are rare, but the problem is that we can’t afford to have even one. And there have already been too many. Furthermore the costs and extremely high technical requirements never go away…. If the true lifetime costs were calculated and required from private sector they would never get built.

    Storage and time shifting for renewables look like more achievable challenges.

    Re: blots on landscape; mostly it’s this: CAVE People. Citizens Against Virtually Everything.

    But there’s an interesting thing here; windfarms often invert the longstanding social order of the countryside. The hill country farmer with the steep and windswept low value sheep farm suddenly has a new and ongoing income, new well maintained roads on his property, and he can still run the same level of stock as before. The people down in the valleys with the good alluvial soils, flat land, water supply, running higher value dairy or crops, and, for a century and more, bragging rights in the pub, get nada. And have to look at the bloody things everyday. Now that’s more than a blot on the landscape; that’s a stick in your craw.

  7. Patrick R says:

    Good insight into the problems of Portugal, and the Club Med countries in general. Bad enough them having to have Germany’s currency but then to have gone mad on inappropriate infrastructure investments too…


  8. Luís says:

    Hi Euan, this post caught me travelling and I haven’t been able to give it proper attention. Just some quick notes on your questions:

    . Wind turbines are prevalent on mountain tops, barring wild life reserves and the geodetical network. There is certainly some visual impact but you soon get used, it is far less intrusive than other infrastructures like highways or railways. Aside that, they are hardly visible when its overcast.

    . The grid went through a modernisation programme during most of the past decade, improving control systems and redundancy. Beyond the wind park, the grid also manages variable supply from small hydro-electric systems with little or no control plus the solar park. I am not aware of excessive voltage events.

    . The renewables programme started about 15 years ago and since then prices have risen about 40%, but are still within the lowest in Europe: 0.14 €/kWh for regular consumers (of which 25% is VAT). The industry pays about 2/3 of that and there is a low rate programme for poor folk (to be expanded next year, reaching half a million consumers). The main reasons for this price hike where (a) the modernisation of the grid, (b) the tripling of coal prices and (c) the doubling of gas prices. The electricity market has been fully deregulated last year and the flat rate is expected to rise up to 0.16 €/kWh; after that the costs of modernising the grid should mostly be done with and the rate should start declining.

    . Traditional electricity suppliers now stand still most of the time, seeing costs going through the roof. Theirs is a lost case, some should stay connected, possibly under MWp contracts.

    . PV is yet to have its impact, in great measure due to high interest rates, but also to lack of public awareness.

    Portugal hardly experienced any economic growth since 1999, thus this programme was forcibly deployed with great care (compare with Spain where the Solar programme went from bad to worse to demented). There were cases of questionable contracts around wind projects with multinational companies, but the Troika forced the renegotiation of all that – one of the few good things they achieved.

    I have several questions on the numbers in this post. I will cross check with the figures from official institutions.

    • Euan Mearns says:

      Luis, what is the highest mountain in Portugal? Portugal has 4.1 GW installed hydro and 4.4 GW installed wind capacity, a population of 10.6 million. The UK has 1.6 GW installed hydro and 8.9GW installed wind capacity.

      I think the scope for countries with large area, small population and large hydro to develop wind sensibly is totally different to a country like the UK.

      Noted that Portugal has not got itself in the same mess as Spain with renewables subsidies. But why did the economy stagnate in 1999? And what is the Troika?

      • Glen Mcmillian says:

        What choice does the UK really have? Getting a large scale nuclear building program approved would appear to be next to impossible but I might be wrong about that.I have only my impression to go on based on reading a couple of English papers and listening to the BBC occasionally.

        The solar resource is lousy.

        Energy is an absolute necessity and if it requires building a huge backup capacity probably based on gas plants and locally stored imported gas -plus making some expensive changes to the existing grid to allow for the intermittency if necessary- the UK will just have to bite the bullet and do it in the same way the country pays for a military establishment that adds almost nothing useful to the economy.

        My reasoning is that eventually the cost of imported gas and coal are going to go so high that whatever electricity you can get from wind is going to be comparatively cheap- even after allowing for the backup capacity.

        I am no expert but it appears that if the country is willing to pay the price you can reduce your dependence on imported energy in a very substantial fashion.

        Failure to pay the price probably means the country will gradually suffer a declining economy and falling standard of living.

        We have a company here in the states that has a motto about their hand tools which are the most expensive ones on the market.It goes something like this.”Quality isn’t expensive. It’s priceless.”

        Expensive wind power in the end is apt to be priceless especially in an energy poor country such as the UK dependent on trade for its economic survival.

      • Alister Hamilton says:

        Troika is Russian, apparently, meaning trio, three of a kind or threesome. The term is used to describe the European commission, the European Central Bank and the International Monetary Fund.

      • Luís says:

        The highest mountain in the continent is just shy of 2000 m. But you might not need high mountains to use the gravimetric potential for energy storage.

        GDP growth rates were significantly reduce after the adhesion to the € (1999) and the opening of borders to China (2001).

  9. Luís says:

    Euan, I took some time verify some of the figures in this post I thought suspicious. Here are some of the things I found.

    The share of renewables in electricty production seems to be lower than the official numbers. The latest official data is:

    2012: 45% (dry winter)
    2013: 54%
    2014: 75% (so far – wet winter)

    Note that this does not include off-the-grid systems. I have tried to find data on the amount of PV electricity generated by this sort of systems, but as far as I know no one is collecting it.

    The balence of trade is definitly wrong, all the values in the graph seem to be far lower than the institutional data, especially regarding 2012. The data I was able to gather:

    2010: 21.38 G€ (peak)
    2012: 10.91 G€
    2013: 9. 28 G€

    GDP per capita also looks funny, but I will have to verify that some other time. Perhaps because it is in US$ instead of €?

    I see you are still using BP’s dataset. I quit using it years ago, I found relevant discrepancies in almost every data series.

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