District Energy in Portugal

Country Profiles
15 November 2019

Unfortunately, at present, District heating (and District Cooling) are completely absent from the Portuguese energy and climate strategy. The National Energy and Climate Plan (PNEC 2030) was submitted to public consultation in May 2019, with no reference made to DHC. A suggestion was presented by Climaespaço (ENGIE), to consider the role of DHC in delivering the EU 2050 climate and energy targets. Due to the country’s climate, Portugal has significant potential for use of District Cooling, especially in the services sector.

There is no specific legal framework for DH in Portugal and no national targets have been set up so far. The context seems to be changing slightly: in 2019, the Portuguese Government announced the intention to promote what can be seen as an opportunity for small-scale district heating systems, based on cogeneration and trigeneration plants, using local renewable resources, especially forest residual biomass. No further details are known for the moment.

The main barrier is certainly the lack of a DHC culture. Decision makers tend to assume that district energy is something for central and northern Europe, where heating needs are much larger than in Portugal. This approach ignores the high potential for district cooling. And forget also that heating needs are still important, especially in regions where winters are colder. As a result of this lack of knowledge, DHC is absent from energy action plans and the legislative framework. In the past, we struggled with a large tax discrimination: VAT for DHC was 23%, and just 6% for electricity and gas.

According to the study (https://www.adene.pt/wp-content/uploads/2019/08/ADENE_vaga-1_RelatórioHABPART.pdf) published in 2017 by the National Energy Agency (ADENE), these are the main technologies used in the residential sector:

Water heating: gas heaters (79%), electrical water heaters (9%), gas or oil boilers (6%)
Space heating: electrical heaters (41%), wood fireplaces (23%), gas heaters (14%)

This study has a small sample size (only 1.300 households).

In 2017, CHP accounted for approximately 9% of the electricity generation in Portugal.

CHP has been strongly reduced over the recent years, as a result of a change in the legal framework, which limited the FiT duration for existing installations and blocked the attribution of new licences. Installed capacity was 1915 MW in 2013 and fell to 1449 MW in 2017. A slight increase took place in 2018, due to a few new self-consumption CHP plants.

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Useful links:

Climaespaço, S.A. (ENGIE Group)

Website: www.climaespaco.pt