Associates Area

Qair is building the largest floating wind and H2 pilot projects in France, and has been awarded 2 GW of offshore capacity, including one floating project, in Scotland

Authors: Alicia Gonzalez Pola (Project Manager) e Pablo Alcon (Director Offshore Wind Spain & Portugal)

Portugal is undergoing a deep electrification of the energy demand and a rapid expansion of renewable electricity generation, along with increased energy efficiency. Portuguese policy goals are clearly defined through targets, detailed national strategies, and recently released regulations and sector specific measures. Thus, the National Plan for Energy and Climate 2020–2030, (pending to submit its final version to the European Commission by end of June 2024) approved by the Council of Ministers, Resolution No. 53/2020 of July 10 (the “PNEC 2030”), establishes national goals for the 2030 horizon for the reduction of greenhouse gas emissions (45% to 55%, compared to 2005), for the incorporation of renewable energy (47%) and for energy efficiency (35 %), interconnections (15%), energy security, internal market and research, innovation and competitiveness and implements the policies and measures for an effective application of the guidelines contained in the Roadmap to Carbon Neutrality 2050 (RNC2050) and for the fulfilment of the defined targets.

To reach the above-mentioned targets, a reinforced grid (designed both for an updated injection and demand of energy), a well-planned energetic mix with a reliable energy baseload is required. Because, of its energy generation profile, amongst other added values, Offshore wind is the perfect add-on in this energy mix; even more, in combination with energy storage and/or renewable hydrogen (H₂) production, to ensure carbon neutral targets and the so desired energy independency of Portugal are reached.

Offshore wind, the bottom fixed type, is an already proved reliable technology, that has been operational for decades in Europe, where shallow bathymetries and high wind resource made possible a quick development of this technology, which have become an important energy source for countries like Denmark, United Kingdom and Germany. It soon became evident that these energy projects were not only a renewable energy source, but also a catalyst for sustainable industrial growth, significantly boosting the economies of the regions where they were implemented.

And here we are, in 2024, with the floating offshore wind maturing, and questions arising about its economic competitiveness compared to solar LCOEs and current energy prices in the Iberian Peninsula. Offshore wind could remain a political decision, and we must exercise caution in making long-term commitments to develop the industry. Therefore, current factors, such as high inflation and cost of capital, high solar generation leading to curtailments, and low energy demand, must be carefully considered.

To maximize the industrial benefits locally, the Portuguese supply chain needs strengthening, for example, through/via incentive mechanisms (tax reduction, inflation protection, etc.) and a foreseeable project pipeline. Two key words: VISIBILITY and VOLUME. By understanding when projects will occur and their scale, developers and supply chain will be able to collaborate effectively to propose bids with robust local industrial plans generating hundreds of millions in regional investment and creating a consequent amount of jobs. In addition, leveraging low energy prices, to establish new business related with offshore wind and upgrading the existing ones will have an immediate effect on the energy demand, stabilizing the energy prices, and fortifying the Portuguese national industry.

With no doubts of the necessity in the energy mix and the economic benefits of the offshore wind, the remaining key element is the industrial and social impact of these projects in Portugal. Social impact includes any environmental effects on the sea and disruptions to other industries, such as fisheries. This element has been safeguarded by the Government through the establishment of the PSOEM (Plano de Situação do Ordenamento do Espaço Marítimo Nacional).  

The DGRM (Direção-Geral de Recursos Naturais, Segurança e Serviços Marítimos) has defined the areas in collaboration with other bodies and incorporated feedback from the public consultation period. These designated areas (including the public participation) help to minimise the potential impact so that that energy projects do not conflict with environmentally protected spaces or disrupt other industries and maritime traffic. Additionally, developers are required to conduct comprehensive environmental impact assessments, implement mitigation measures, and maximize compatibility with other uses, including providing compensation when compatibility is not feasible.).

To achieve a substantial positive impact on both the environment and the economy, we simply need to establish an attractive and transparent offshore wind regulatory framework. This should include well-defined auction calendars and a streamlined permitting process. With these elements in place, the pathway to success will naturally unfold. Optimistically, with recent announcements promising clarity, all remaining uncertainties should be resolved by July.

As a summary, for this vision to become a reality, developers must have clear VISIBILITY into the project's robustness, including certainty on factors such as VOLUME, seabed occupancy, grid connection, and energy prices. Realizing this value chain in Portugal necessitates the deployment of colossal capital, presenting an unparalleled opportunity for the supply chain and developers to collaborate effectively.

Renewable hydrogen, much like floating offshore wind, could represent a crucial piece of the puzzle in the transition to a sustainable future Portugal wants to achieve. Achieving carbon neutrality across various industries and transportation sectors solely through renewable energy electrification is not only challenging but would also be unsustainable in the long run. This is where renewable hydrogen (H₂) will take centre stage, offering a viable and leading solution to bridge the gap and drive Portugal towards its carbon-neutral targets. For this transition to succeed, robust regulation and infrastructures are essential.

The first pilar, regulations, should be anchored in a clear legal framework. The National Strategy of Hydrogen is a good start, providing a degree of certainty regarding the government’s plans for this transformative technology. In this context, it is crucial that the transposition of the Delegated Acts considers the competitiveness Portugal must maintain compared to other European countries with already strongly decarbonized energy systems. To thrive in the renewable hydrogen industry, it is essential to maximize the productivity of hydrogen production facilities, which includes, among other factors, optimizing their operating hours. Last but not least, a transparent permitting process and stringent environmental requirements are also crucial.

The second main pillar, infrastructure—encompassing H₂ pipelines, injection points, and retail facilities—should be developed through close public-private collaboration. A prime example is the well-known H2Med project, where the governments of Portugal, Spain, and France, alongside private gas utilities from each country, are spearheading the construction of a cross-border hydrogen pipeline network. Another notable example is the emerging network of retail points promoted by private companies. These initiatives, although linked to projects with uncertain competitiveness due to underdeveloped demand, are crucial steps towards establishing a stable hydrogen retail market.

Getting back to basics, the key challenge lies in ensuring the competitiveness of renewable hydrogen (H₂) against natural gas and other types of hydrogen. This challenge is exacerbated by the current low initial demand and cautious investments in the sector. Much like the offshore wind industry, we are navigating a landscape shaped by political decisions. To drive this change, governments should implement robust incentives, such as tax reductions, inflation protection mechanisms, and grants for off-takers to transition their technology. These measures will help stimulate demand and investment, paving the way for renewable hydrogen to become a viable and competitive energy source.

To complete the parallel with offshore wind, renewable hydrogen will be equally crucial for accelerating the Portugal’s economy by attracting international investments and fostering collaborations. Renewable hydrogen will also have a profound impact on the social and industrial development of the country, engaging a wide array of key players throughout its value chain (Customers, Producers, Distributors & Transporters, Financial entities, etc.). By integrating these stakeholders, renewable hydrogen can drive significant economic growth and position the country as a leader in the global transition to sustainable energy.

All the above can be summarized in a single word: COLLABORATION. A close partnership between public administrations and the private sector is essential to establish a solid foundation for both offshore wind and renewable hydrogen industries. Such collaboration will create a clear pathway to attract investors and suppliers, ensuring the sustainable growth of these sectors and enriching Portugal. We are fortunate to be part of these emerging industries, playing a crucial role in combating climate change and paving the way for a sustainable future.