In Portugal, studies have shown that many people are unable to properly heat their homes. Although Portugal is a sunnier and warmer country, the comfort of Portuguese homes, both in the winter and in the summer, is still low as many people cannot keep it cooler in the summer or heat it in the winter.

At a first sight there are two main causes of energy poverty. Primarily, old buildings that often do not have adequate insulation and the high price of electricity that many people cannot afford, for example, to have heaters in their homes when it is cold or air conditioners when it is hot.

However, despite this situation, the price of electricity in Portugal seems to be in line with the European Union average, according to data released by EUROSTAT, which indicates that Portugal is in 7th place in prices, just behind the average of the EU.

However, the report also states that Portuguese purchasing power is also below the EU average, which makes (when comparing electricity prices in relation to purchasing power) Portugal rank 5th in the highest electricity costs of the EU.

Combating the problem

To combat this unfortunate situation, the government has implemented policies to make energy more affordable to those in need through social tariffs on electricity and natural gas “which provide discounts on parts of distribution tariffs to reduce electricity and gas bills (…) In December 2020, 14 percent of all households received electricity tariffs”.

To address this problem, according to a Portugal 2021 Energy Policy Review report, one of the first steps to reduce energy costs is to “enhance electricity retail market competition by removing barriers to entry for new players and facilitate market innovation to incentivise demand response, distribute renewable and increase electrification while ensuring market integrity and security”.

On the other hand, Newcon Energy Portugal - a German company that has been investing in the development of photovoltaic projects in Portugal since 2016 - criticises some numbers of Article 276 of the new decree-law that regulates the National Electric System (SEN) for changing the rules of the game at the last minute, which can also prevent electricity costs from dropping as a result.

Changing the rules

The company, which has already invested several million in Portugal, is concerned about the change in the assumptions that this new law involves, such as the new requirements that make the continuation of some projects impossible.

“A main point of sharp criticism is the inclusion of a new criteria - the existence of an approved environmental assessment declaration – and at the same time the total disregard and lack of prioritisation for the projects that have already been evaluated and ranked in the official classifications”, said the CEO of Newcon Energy Portugal, Rex Hajdari.

This amendment in their opinion is “a massive step back in the country’s energy transition goals and causes irreversible damage to the country’s credibility”. In addition, “our business is based on trust as we are dealing with extreme high numbers - nobody will invest in a country where they have to be afraid of what will happen in the next month. If you invest money you need to have the guarantee that everything is going according to plan and the political framework is reliable”, he told The Portugal News.

“Furthermore, should the wording of numbers 5,6 and 7 of Article 276 of the Draft DL be approved, most of the work and investment of the last few years would be destroyed and almost all projects would go back to square one. The withdrawal of these projects will cause that the reserved capacity allocated to these projects, thus delaying the development and commencement of the projects, and ultimately the much expected reduction in electricity prices for consumers will also be postponed”, they concluded.