Portugal: biomass and biogas in power generation — from production support to grid connection tenders

Portugal has no single rate per MWh for electricity from biogas and biomass, as Italy or France do. The most distinctive element of its policy is the regime for new forest biomass power plants under Decree-Law No 64/2017, linked to reducing the risk of forest fires. In May 2019 the government reversed the priority from generating electricity alone to heat, and in October 2023 it announced a tender for 60 MW of grid connection capacity for such plants.

The 2017 regime

Decree-Law No 64/2017 approves the regime for new forest biomass power plants. Under it, when applications exceed the available grid connection capacity, the Direção-Geral de Energia e Geologia (DGEG) conducts a competitive procedure. The plants are to be built in the territories most vulnerable to rural fires, and their task is to make use of biomass from forests.

The turn of May 2019

At the EUBCE conference in Lisbon, on 27 May 2019, according to Agroportal the Secretary of State for Energy João Galamba announced that the state would "abandon public support for biomass strategies intended only for electricity production". Support was to go to projects that use thermal energy. The report gave, among other things:

• more than EUR 20 million from the POSEUR programme for new small biomass cogeneration plants,
• EUR 21 million of support for the electricity sale price over 15 years,
• about EUR 340 million of total financing for these installations, with state aid approved in Brussels at EUR 320 million,
• the abandonment of four planned plants with a total capacity of 60 MW with tariff support,
• the earlier approval of 11 plants with a total capacity of 193 MW,
• criteria: areas of high fire risk, a documented biomass supply chain and a size matched to documented heat demand (1 MW thermal corresponds to about 0.5 MW electrical).

According to the same text, feedstock prices nearly doubled in less than a year compared with the previous level of EUR 25–27 per tonne.

The 2023 tender

On 13 October 2023 the portal ECO reported that the day before the Council of Ministers had approved a decree amending the special and extraordinary regime for new biomass plants. It allows a competitive procedure in which grid connection capacity reservation titles with a total capacity of 60 MW are awarded. A single plant may apply for a maximum of 10 MW, and the announcement of the tender was expected by the end of November 2023. See the post on the announcement of the tender.

Portaria 425/2025

The competitive procedure for grid connection capacity reservation titles (TRC) for new forest biomass power plants is governed by Portaria No 425/2025. This act describes how the tender is to be conducted, and its basis remains Decree-Law 64/2017 as amended by Decree-Law 105/2023.

Timeline

Each of these stages concerns solid biomass burned in power plants. The common denominator is that the state decides how much capacity may enter the grid and links this to a forestry objective: removing biomass from fire-prone areas, not maximising energy production.

Biogas

According to the book chapter "From Waste to Energy. What is the current contribution of the Portuguese Biogas?" (Malico, Hernández, Marques, University of Évora; Nova Science Publishers, 2012), animal waste and other organic effluents are a significant source of energy, and new feed-in tariffs were introduced in 2007. The authors stated that installed electrical capacity from biogas then amounted to about 20% of a potential of 229 MW, and that the use of biogas for energy production was at an early stage.

What follows from this

For an investor in Portugal the first question is not the rate per MWh but access to grid connection capacity and meeting location requirements. For comparison with the Polish market see renewable energy reference prices 2023; in Poland it is the reference price and the auction that decide profitability, in Portugal the award of a reservation title.