Portugal is on track to become a net exporter of renewable energy before 2035, according to projections by Aurora Energy Research. This shift is underpinned by three key pillars: the accelerated expansion of clean generation, the deployment of 5 GW of storage capacity by 2030, and a market structure that supports profitable investment conditions. "We foresee a reversal of energy flows between Spain and Portugal, where, over the next decade, Portugal will transition from being a net importer to a net exporter of energy," anticipates Guillermo Burillo, Senior Associate at Aurora Energy Research. In conversation with Strategic Energy Europe, Burillo explains that this structural shift is based on Portugal"s projected growth in renewable generation, which will account for more than 90% of its electricity mix by 2031, enabling the production of green hydrogen and other RFNBOs from grid electricity. Currently, Portugal relies heavily on the Spanish system through the Iberian Electricity Market (MIBEL), with 4.5 GW of interconnection and a high number of hours in which the marginal price is set by Spanish generation.
Expanding domestic supply, supported by storage, will enable Portugal to reverse this dependency.
Technology profitability: Portugal"s competitive edge Burillo highlights significant differences in the profitability of renewable technologies between Portugal and Spain.Although solar PV is increasingly affected by cannibalisation during peak daylight hours with captured prices averaging 44/MWh in 2024 Portuguese market conditions remain more favourable.
"This makes them especially attractive as a minimum secured revenue stream," he notes.
Wind power stands out as the most profitable technology in the short term, driven by higher captured prices."Wind currently shows the highest short-term profitability thanks to captured prices of 55/MWh in 2024," says
Burillo.Despite having investment costs up to 235% higher than solar PV, its generation profile better aligns with higher wholesale price periods.
Hydropower, particularly reservoir-based plants, also achieves above-average captured prices.In 2024, Portugal"s hydro fleet recorded a mean captured price of 62/MWh.
Storage: system stabiliser and new revenue stream Energy storage is set to play a critical role in accompanying the renewable rollout and reducing market volatility.Aurora projects total installed capacity from batteries and pumped hydro will reach 5 GW by 2030.
"The increase in installed battery and pumped storage capacity could reduce the occurrence of zero or negative prices," notes Burillo. Storage allows energy generated during low-price hours to be shifted to periods of high demand, improving project profitability.Additionally, batteries can access ancillary service markets, including secondary and tertiary reserves.
However, the current incentive scheme imposes restrictions: at least 75% of stored energy must originate from the hybridised asset. "This may reduce revenues by up to 40% compared to scenarios without such limitations," cautions Burillo.Nevertheless, hybridisation between solar PV and batteries remains a growing trend.
Regulatory framework and comparison with Spain While Spain and Portugal face similar structural challenges, they differ in their regulatory approaches.Spain has already launched a public consultation on its capacity market design and plans to hold its first auction in 2025.
Portugal, in contrast, has yet to announce a timeline for introducing such a mechanism.
Portugal has made notable progress in processes such as wind repowering, allowing up to 20% capacity overbuild under streamlined procedures.It also leads in regulatory agility for integrating storage into PV projects with existing grid access.
At the European level, the transposition of the Renewable Energy Directive (RED II) remains pending."Its implementation is crucial for laying the groundwork needed to boost investment in renewables," stresses Burillo.
A new role for Portugal in the Iberian system With a renewable share surpassing 90% by 2031, improved market conditions and growing storage capacity, Portugal is positioning itself to move away from dependency on Spain"s electricity system. The Sines region is emerging as a strategic hub, combining potential for green hydrogen development and data centre infrastructure, which will drive electricity demand and add value to a flexible and clean energy supply. "Portugal has strong potential to establish itself as a key market for affordable and clean energy," concludes Burillo.Based on robust data and structural conditions, the country is poised to become one of Europe"s most promising players in the energy transition.