A new perspective to account for renewables impacts in Portugal

Departing from the main query of how to re-design the existing RES-E incentive model in view of a tighter integration with the Iberian Electricity Market, a restructured proposal of the current feed-in tariff remuneration model is presented. The paper begins with the existing energy policy context in Portugal, in section II. A summary of the most recent changes in the Portuguese electricity systems are presented in section III. Section IV identifies how RES-E (special regime) production costs impact on the electricity final price. Section V describes the remuneration model employed by the Portuguese Energy Regulator (ERSE) and proposes an innovative methodological approach. Section VI compares both methodologies results from experimentation with 2008 and 2009 data, and section VII concludes. Results show that electricity consumers would have avoided paying approx. 3.2 and 7.9 €/MWh, each of the years, to subsidize RES-E in case the new methodology was pursued and investors profitability maintained.