Portugal’s Energy Sector

The NY Times looks at Portugal’s program to shift the country from fossil fuels to renewable energy ove the past five years.  As always, with articles like this, the looming elephant is how applicable this transition is for America. 

Portugal is a small country, but the gumption and necessity of doing this is something America could learn from.

While the government estimates that the total investment in revamping Portugal’s energy structure will be about 16.3 billion euros, or $22 billion, that cost is borne by the private companies that operate the grid and the renewable plants and is reflected in consumers’ electricity rates. The companies’ payback comes from the 15 years of guaranteed wholesale electricity rates promised by the government. Once the new infrastructure is completed, Mr. Pinho said, the system will cost about 1.7 billion euros ($2.3 billion) a year less to run than it formerly did, primarily by avoiding natural gas imports.

A smaller savings will come from carbon credits Portugal can sell under the European Union’s carbon trading system: countries and industries that produce fewer emissions than allotted can sell permits to those that exceed their limits.

Mr. Fujino of the International Energy Agency said Portugal’s calculations might be optimistic. But he noted that the country’s transition had also created a valuable new industry: Last year, for the first time, it became a net power exporter, sending a small amount of electricity to Spain. Tens of thousands of Portuguese work in the field. Energias de Portugal, the country’s largest energy company, owns wind farms in Iowa and Texas, through its American subsidiary, Horizon Wind Energy.

America certainly has the land, the engineering know-how, and at one time, I would say, we’d even have the chutzpah to make this happen.  Now?  Not so much. 

If the United States is to catch up to countries like Portugal, energy experts say, it must overcome obstacles like a fragmented, outdated energy grid poorly suited to renewable energy; a historic reliance on plentiful and cheap supplies of fossil fuels, especially coal; powerful oil and coal industries that often oppose incentives for renewable development; and energy policy that is heavily influenced by individual states.

The relative costs of an energy transition would inevitably be higher in the United States than in Portugal. But as the expense of renewable power drops, an increasing number of countries see such a shift as worthwhile, said Alex Klein, research director, clean and renewable power generation, at IHS.

“The cost gap will close in the next decade, but what you get right away is an energy supply that is domestically controlled and safer,” Mr. Klein said.

Unfortunately, in America, the political landscape is dominated by election posteuring and the  now, now, now mentality.  There is no long term planning.

Comments on this entry are closed.