The EDP Group develops electricity production activities in Portugal through two of its subsidiary companies: EDP Renováveis, with wind and solar generation, and EDP Produção, with hydro, thermal and floating solar energy generation. With the closure of the Sines plant in January 2021, EDP Produção no longer has coal in its energy mix. In this way, the thermal plants owned by EDP Produção in Portugal are combined co-generation and cycle plants with natural gas.
Electricity production in Portugal is classified in 2 ways: production under the ordinary regime (PRO) and under the special regime (PRE).
Ordinary production:
The ordinary electricity generation regime applies to the production of electricity based on traditional non-renewable sources and large hydroelectric centers.
The ordinary regime is commercialised amongst competitors since 2007, after the implementation of MIBEL (Iberian Electricity Market). Since that date, the production activity has been liberalized and the plants offer their energy on a common energy platform, integrated at an Iberian level.
The remuneration of the plants also changed, and the Energy Acquisition Contracts (CAE) gave rise to the Maintenance Costs of the Contractual Balances (CMEC) for EDP. As for the decision to operate the exchanges, it ceased to be operated centrally by REN, and moved to a decentralized dispatch regime under the responsibility of the different operators.
Currently, the level of integration of MIBEL is high, with the wholesale electricity price equal in Portugal and Spain at around 95% of the time, recognizing that the interconnection capacity allows for the optimization of usage of the most cost-efficient exchanges every hour, in these 2 countries put together.
The management of the markets that make up MIBEL is the responsibility of the Iberian Energy Market operators The Pólo Português (OMIP) is responsible for managing the forward market.
Special regime production
Special regime production (SRP) is the production activity subject to special legal regimes, such as the production of electricity through co-generation and renewable resources (except large hydro).
In Portugal, SRP includes 2 types of remuneration regime:
The regime includes:
- Subsidized regime, where producers sell electricity through tariffs administratively set by the government through an ordinance. The placing on the market of the SRP with guaranteed remuneration is ensured by the Last Resort Trader (LRT), which has the legal obligation to purchase the entire SRP at the price defined in the subsidized tariff, which also benefits from priority dispatch.
- General remuneration, where producers place their energy directly on the market under conditions similar to those of PRO, with the total remuneration given by the market price. Renewables can be placed on the market with the help of a trader / aggregating agent.
It is expected that the weight of the SRP in the market regime will increase considerably in the coming years, as the SRP technologies mature and increase their competitiveness, as well as due to the gradual end of the subsidized tariff regime of the older power plants.
Market liberalization
In terms of commercialisation, there has been an increasing liberalization of the sector. In 2020, the free market represented 94% in Portugal, and 89% in Spain, for the total volume of sold electricity. According to Eurostat data, final sales prices to domestic customers in Portugal are in line with the European Union average, despite our country having a tax and electricity charge higher than the European average. For industrial customers, prices in Portugal have remained below the EU average for almost all consumer bands analyzed by Eurostat.
The natural gas sector in Portugal is also fully liberalized, with 98% of consumption in free market regime in 2020. natural gas in Portugal is imported in its entirety, with typically more than 80% of the natural gas volume entering the country by boat (which discharges liquefied natural gas to a re-gasification plant in Sines), and the remainder via Spanish gas pipelines.
Integrated Annual Report 2023
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