February 22, 2019 / 2:27 PM / a year ago

Portugal plans solar power licensing auction by mid-year

LISBON, Feb 22 (Reuters) - Portugal will launch its first big auction of solar power capacity in June or July, offering 1,750 megawatts as it seeks to boost emission-free electricity production, Environment and Energy Transition Minister Joao Matos Fernandes told Reuters.

The new capacity to be offered to investors, who have already shown strong interest in such an auction, is more than 2.5 times the installed solar power capacity in Portugal as of the end of last year and is part of a plan to reach between 8,100 MW to 9,900 MW by 2030, the minister said.

“It is scientifically proven that south Algarve and north Alentejo are the areas with the biggest potential for solar energy in Europe, the only comparable area being in central Turkey,” he said, referring to Portugal’s two southern regions.

“So we will deliberately bet on promoting solar power generation projects,” he said.

The terms of the auction will be known in March or April, he said, adding that the government wanted to take into account the opinions of “many foreign investors who are very interested in taking part”.

He expects the new capacity to be added over the next two or three years in a sharp acceleration from the pace seen over the past couple of years when licences for 1,200 MW were attributed but only 49 MW have been installed.

The recent requirement for producers to sell the energy at market prices and not a fixed guaranteed rate as before has been one of the key obstacles to new additions as it constrained small producers’ access to financing.

The auction will be designed to allow small producers to fix a guaranteed price, while bigger players with good access to financing will likely prefer to use market electricity prices, Matos Fernandes said.

He said there were players interested in installing projects as big as 300-400 MW. So far, Portugal’s largest solar project has been the 219 MW Solara - also one of Europe’s biggest - which was bought by Allianz Capital Partners in December.

The 1,200 MW already licensed do not need to go to the auction, but licensees will be able to sign up for the guaranteed price to be set there, the minister said.

The government expects market prices to be higher than those to be set in the auction and is planning to require that large producers contribute a share of their gains above the fixed price to the national grid. (Writing by Andrei Khalip; editing by David Evans)

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