Portugal

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GH2 Country Portal – Portugal

Green Hydrogen Vision

The Government of Portugal aims at achieving carbon neutrality by 2050 and envisages hydrogen as a fundamental vector for the decarbonization of various sectors of the national economy towards carbon neutrality goal.

Portugal is one of the leading economies in Europe based on renewable energy composition in the final energy consumption and aims to achieve 80% of electricity sector consumption through renewables by 2030. Portugal’s strategic location with an extensive coastal line and easiness of access by sea in addition to the existing infrastructure for natural gas and low-cost renewables makes it a good hydrogen hotspot for green hydrogen in Europe.

The main objective of the government with introduction of the strategy is to have stability for the energy sector, promoting the gradual introduction of hydrogen as a sustainable pillar and as a strategic opportunity for the country. In addition, the goal of the Portuguese hydrogen economy is increasing the independence of the Portuguese energy sector from other countries- replacing imported fossil fuels by a nationally produced green energy source.

 

National Strategy

The National Hydrogen Strategy (EN-H2) [IM1] was released in August 2020 by the Portuguese Ministry for Environment and Climate Action, with alignment to the 2050 Carbon Neutral Roadmap (RNC 2050) and the 2030 National Energy and Climate Plan (PNEC 2030).

The strategy promotes an industrial policy around hydrogen, based on the definition of a set of public policies that guide, coordinate and mobilize public and private investment in projects of production, storage, transportation, and consumption of renewable gases in Portugal.

The national strategy foresees that Portugal can benefit from the following uses of green hydrogen for transport (in particular the heavy road, maritime, rail and even air) and as a replacement of natural gas in the industrial sector. Usage for electricity through fuel cells and injection into the natural gas network for residential use are a few other supply end benefits from the national strategy.

The strategy was developed after identifying 5 key hydrogen value chains in Portugal:

  1. Power to Gas (P2G): direct injection into natural gas network
  2. Power to Mobility (P2M): produced locally or transported to filling stations
  3. Power to Industry (P2I): replace natural gas with green hydrogen in industries (steel, chemical, refining etc.)
  4. Power to SynFuel (P2S): replace fossil fuels with green synthetic fuel
  5. Power to Power (P2P): excess electricity from renewable sources to be converted into hydrogen, stored, and then converted back to electricity via fuel cells

Although Portugal presents favourable conditions for green hydrogen production, the strategy has set out several criteria for the selection of projects - offtake, water, renewable energy sources, land, infrastructure etc.

Capacity and capacity targets 

The national strategy  assumes some key goals for 2030:

  • To carry out a large-scale production of green hydrogen in Sines with a capacity of 1GW by 2030.
  • 5% green hydrogen in final energy consumption, road transport and industry.
  • 15% green hydrogen injected into natural gas networks.
  • 50 to 100 hydrogen refuelling stations.
  • Between 2 and 2.5GW of installed electrolyser capacity.

According to a report by Hydrogen Europe, Portugal currently produces the most affordable renewable hydrogen in the European Union.

Impact Targets

  • With the policy, Portugal aims to reduce GHG (greenhouse gas) emissions by 85% to 90% in relation to 2005 levels.
  • A 55% reduction in GHG emissions and a 47% share of renewable energy in gross final energy consumption is expected to be achieved by 2030.
  • Carbon sequestration to reach levels of 9 to 13 million tons of CO2 in 2050.

Policy Spotlight

The national strategy provides several support mechanisms to encourage new investments in green hydrogen:

  1. The injection of hydrogen into natural gas networks may benefit from a partial or total exemption from network access tariffs for an initial period.
  2. A public allowance to hydrogen production, through a premium that covers the difference between the production price of green hydrogen and the price of natural gas in the Iberian natural gas market (MIBGAS).
  3. Fiscal mechanisms to encourage replacement of natural gas by green hydrogen, adjusting the relative prices between the two alternatives, penalizing natural gas and reducing the cost of hydrogen. Tax benefits and positive discriminations in applicable taxes shall be established based on the advantages of green hydrogen.

Support Scheme for Renewable Hydrogen: The Portuguese government announced in January 2023 that it is tendering for the supply of renewable hydrogen and biomethane, aiming to replace natural gas with renewable gases. The tendering process aims to establish 120GWh/year of renewable hydrogen and 150GWh/year of biomethane, offering a maximum subsidy of €127/MWh for hydrogen and €62/MWh for biomethane. Contracts are expected to be valid for 10 years.

Project Spotlight

  1. Madoqua H2: Sines, an important hub for green hydrogen in Europe consists of several anchor projects recognised in the national strategy. Dutch company Madoqua Ventures is investing €1.3 billion in a green hydrogen and ammonia project in the Sines zone. The Madoqua H2 project with an investment of €400 million will install a 500 MW electrolyser capacity at Sines, which will allow the production of 70,000 tons of green hydrogen annually, creating 500 direct and indirect jobs. The Madoqua NH3 (formula ammonia) project, also in Sines, expects an investment of €500 million and 500 direct and indirect jobs. The project combines green hydrogen and nitrogen to produce green ammonia, a key ingredient in the fertilizer industry.

 

  1. H2Évora: This project is Portugal's first successfully commissioned solar-to-hydrogen project, developed together by Portuguese Fusion Fuel and Ballard Power. The pilot has 15 solar hydrogen generators to produce an estimated 15 tones of green hydrogen per year. The facility includes a 200-kW fuel cell module supplied by Canada-based Ballard Power. It is used to convert green hydrogen into electricity, enabling Fusion Fuel to sell power into the grid during periods of peak demand. H2Évora includes hydrogen purification, compression, and storage systems. It has been operating continuously since late 2021 and is now connected to the Portuguese electric grid. Fusion Fuel is again set to receive a €10 milliongrant from the Portuguese government to develop another 6.6 MW green hydrogen project.

 

  1. Synthetic Fuel for Aviation: The project is being developed by Solabelt and Akuo Energy using green hydrogen produced with electricity from solar PV sources to produce an alternative aviation fuel. The production of such fuel should be around 10 tonnes a year. The forecasted investment for this project is around €90 million.

 

Financing 

  • The national strategy estimates an investment for €7 billion by 2030 in hydrogen production projects.
  • According to the environment minister, Mr. João Pedro Matos Fernandes, there are 70 private investors planning to spend €10 billion to make Portugal a major producer and exporter of green hydrogen in Europe (Nov 2022).

Government green hydrogen lead 

The Ministry of Environment and Climate Action (Ministério do Ambiente e Ação Climática)