Emily Brontë would have felt at home in the Alto Minho. The wuthering heights of Portugal’s northernmost region are as wild and exhilarating as the Yorkshire moors, a landscape of “intractable mountains, dark woods, deep valleys and dangerous ravines”, according to a monk who reached the area in the 17th century. The weather rarely strays from what Brontë called “atmospheric tumult” and the people, like her tempestuous characters, see themselves as fearless, headstrong and rebellious.
Horses, an ancient local breed known as garranos, roam free on boulder-strewn uplands. Further down the steep valleys, stone villages shelter in the lee of granite hills. Packs of wolves still prey on cattle, sheep and goats in the rugged mountain ranges, known as serras, that form this part of Portugal’s north-western border. The stone walls of fojos, elaborate traps once used to lead the wolves into deep pits, wind across the grassy slopes.
Today, for the sparse population of subsistence farmers, redress for livestock lost to wolves involves filling out forms for government compensation, rather than dogs, torches and hunting parties. But the wolf as an embodiment of the power and mystery of the Alto Minho still looms large in the local imagination. José Miguel Oliveira has had two close encounters. An economist originally from Setúbal in southern Portugal, he recently glimpsed a wolf at dusk, making off into a pine wood. He also keeps on his mobile phone a photograph he took of a wolf’s paw print, distinguishable from a dog’s track by its longer claw marks and the spacing of the four toes.
Over the past five years, Oliveira has come to know this territory like few others. In the process of pinpointing the sites for 120 wind turbines spread over five different serras, he has gained an intimate knowledge of a region unchanged for thousands of years. “It’s a place that always makes a strong impression on people,” says Oliveira, the project manager for Ventominho, the wind energy company that operates the turbines. In a task beyond the sturdiest garrano horses, installing each turbine required 10 articulated truckloads of huge concrete and steel components to be transported up steep hill tracks to altitudes of up to 1,300m. “It was a logistical challenge,” says Oliveira. “We had to negotiate individually with every landowner when a road needed widening or a corner modifying.”
Erecting the turbines, each 65m or 78m high, linking them together with a 54km power line and building substations took 600 workers the better part of two years. When the 120 turbines became fully operational in January, this impoverished rural region, depopulated by successive waves of emigration, found itself unexpectedly at the forefront of the clean energy revolution. The Alto Minho is now the site of the largest onshore wind farm in Europe, among the first fruits of a bold plan to make one of western Europe’s poorest countries a world leader in renewable energy.
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Portugal enjoys a rare geographical bounty. Thanks to its position, climate and geology, it is blessed with an abundance of clean energy resources. Prevailing westerly winds and a broad sweep of accessible hill ranges in the north and centre create ideal conditions for wind farms. The south enjoys up to 300 sunny days a year, making it a natural choice for solar energy plants. A long Atlantic coastline, where swells and storms are not as strong as in northern Europe, provides enormous potential for wave energy. Rivers entering the country from Spain are an important source of hydro power.
For years, the productive potential of these natural advantages lay unnoticed and unrealised. But global efforts to combat climate change by reducing CO2 emissions and finding clean alternatives to fossil fuels have alerted the country to its resources. The assets of water, sun and wind, previously seen only as a boon for tourism, will in a few years become the country’s main source of electricity generation.
Combining wind and water power turns dams into immense batteries
Water is already a vital source of energy in Portugal in the form of hydroelectric dams. But it is in the combination of wind and hydro power that the greatest potential lies. “The biggest problem facing energy producers is storage,” says António Mexia, chief executive of Energias de Portugal, the former state monopoly that is now the country’s largest listed company. If there is no demand for the electricity produced at night by wind turbines, for example, the power is lost.
Mexia says Portugal can radically increase the production potential of both wind and hydro plants by using surplus wind energy to drive water upstream and fill hydroelectric dams. “The dams become batteries which can be managed to produce power on demand regardless of wind conditions.”
To this end, Portugal is investing in one of the world’s largest dam-building programmes, spending €3.5bn to build 10 new dams and increase the capacity of six others. This will increase hydro capacity from just under 5,000MW today to more than 8,600MW by 2020. Portugal currently uses only 55 per cent of its total hydro capacity, one of the lowest levels in Europe. The dam programme will bring this up to the EU average of more than 70 per cent.
About 20km from the wind turbines turning on the bleak hilltops of the Alto Minho, the Alto Lindoso hydroelectric dam, one of the biggest in Portugal, towers 330m over the Lima river, producing about three times as much electricity as the turbines that make up the largest onshore wind farm in Europe. Working together, their potential is even greater. Close to the Amareleja solar plant, more hydro capacity is being installed at the Alqueva dam, the site of western Europe’s largest reservoir. Says Manuel Pinho, the economy minister: “For Portugal not to use its enormous potential for hydro, wind and other clean energies would be like Venezuela not using its oil.”
“In the same way as Finland is famous for mobile phones, France for its high-speed trains and Germany for its industry, Portugal will become known for renewable energy,” declares Manuel Pinho, the economy minister and chief architect of a plan to pump new strength into a weak economy by tapping into the country’s huge potential for clean energy. “All of a sudden, a lot of people are looking to Portugal as an example.”
The 40m rotor blades turning on the heights of the Alto Minho hills harvest the wind to produce an estimated 530GWh of electricity a year, enough to supply 53 per cent of the needs of the local population of about 250,000. But this represents only a small part of a much wider transformation of the Portuguese economy, focused on harnessing the country’s natural endowments. As other projects advance, including the world’s largest solar photovoltaic farm, the first commercial wave power plant and a national network for electric cars, the Lisbon government is setting ambitious new benchmarks for Europe’s response to climate change.
By 2020, Pinho says, the country will produce more than 60 per cent of its electricity and 31 per cent of its energy (including electricity, heating and transport fuels) from renewable sources. This compares with a European Union electricity target of 20 per cent of energy. Plans announced by US president Barack Obama will see America producing 12 per cent of its power from clean energy sources at about the time Portugal reaches the 50 per cent mark, says Pinho. By next year, he says, Portugal will already emit less CO2 per capita than any other EU country.
Pinho, 54, a former banker and economist with no background in energy, consolidated his vision of Portugal as a clean energy economy in 2005, when the centre-left Socialist party won its first absolute majority in parliament and José Sócrates, the incoming prime minister, asked him to leave a senior position at the Espírito Santo banking group to take up the economy portfolio. He brought with him to the ministry both a willingness to think radically and parts of his large collection of historic art photography, of which he is an avid collector.
“I was conscious that a small country like Portugal couldn’t be good at everything,” says Pinho, a soft-spoken, unassuming man. “But I knew we needed to be very good at something. If we didn’t move our technology rapidly forward, we would fall behind. Leadership of capital- or skill-intensive industries such as semiconductors or software design is beyond our capacity. By a process of intuition, renewable energy emerged as an ideal sector in which Portugal could become a world leader and establish a role for itself at the technological frontier. This seems evident today, but four years ago it was far from obvious.”
Pinho’s clean energy plan won immediate backing from Sócrates and within six months of the new government taking office a programme called the New Energy Policy was approved. The plan envisages Portugal producing 31 per cent of all the energy it consumes, including transport, from renewable sources by 2020, up from 20.5 per cent today. “This is not wishful thinking,” Pinho insists, “the projects are in the pipeline.” The equivalent energy target for Britain is to move from 1.3 per cent to 15 per cent.
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Portugal’s push to harness the full potential of its renewable resources is inspired partly by dire necessity. In a country that lacks any primary energy resources of its own, oil, gas and other energy supplies have to be imported, placing a heavy burden on a relatively small economy. In 2008, the energy deficit was the equivalent of 5 per cent of gross domestic product. Falling oil prices could close half of that gap this year, but fluctuations like this serve only to emphasise the extent to which Portugal is subject to international forces beyond its control.
The key to achieving greater energy independence, Pinho says, is to adopt the right business model to produce clean energy at competitive prices. “To do this a country needs to achieve a minimum scale of production, enforce competition and create the right incentives to bring in private investment.” By 2015, he says, investment in renewable energy will be saving Portugal €440m ($559m) in annual fuel costs. This, in turn, will reduce CO2 emissions by more than 12 million tonnes a year. Traded at current prices of €8.50 per tonne on Europe’s carbon emissions market, this represents a further annual saving of €100m.
The business model favoured in Portugal is based on what are known as feed-in tariffs. These involve an undertaking to buy electricity from clean energy producers at above market rates for a fixed period. Unlike other incentives systems, such as the green energy certificates used in Britain or US tax credits, feed-in tariffs provide long-term financial stability that enables producers to raise project finance.
Feed-in tariffs drop in line with the diminishing costs of clean energy production as technology evolves and producers gain economies of scale. Wind capacity has developed much faster in Portugal than anyone forecast. Having grown from 537MW to 2,740MW over the past five years, capacity is projected to double again over the next three, and to reach 8,500MW by 2020. Wind turbines will then supply 30 per cent of the country’s electricity needs, double their share in 2007. As a result of that rapid growth, the feed-in tariffs now being offered have fallen to €0.07 per kWh, roughly the equivalent of average prices on the wholesale electricity market. This means Portugal has reached a stage where wind power is almost as cheap as the electricity generated by fossil fuel plants. If the costs of paying for permits to produce carbon dioxide are taken into account, it is probably already cheaper.
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Few areas in Europe enjoy more sunshine than the small, white-walled town of Amareleja, 150km south-east of Lisbon, close to the border with Spain. Most Portuguese know it as the place where the country’s highest temperatures are registered – 50°C and more. But it is the reliability of Amareleja’s sunlight – an annual average of seven hours a day – rather than its intensity that made the district a natural choice as the site for the world’s largest photovoltaic generating plant.
Built, owned and operated by Acciona, a Spanish construction and energy group, the plant could be mistaken for a set from a big-budget science-fiction movie in which scientists try to make contact with an alien intelligence. In eerie silence, 2,520 solar panels, each bigger in area than the average two-bedroom apartment, slowly track the sun across the sky. Each contains 104 polycrystalline silicon modules, which convert solar radiation into energy.
Solar technology was far less developed in 2001 when local officials first raised the possibility of exploiting the area’s abundance of sunlight to create jobs and revenue in a poor rural area with no industry and few natural resources. Renewable energy was then low on the government agenda and little progress was made until the Pinho plan provided the legal framework and the political encouragement to move forward. Acciona was awarded a 15-year licence in 2006, construction began in late 2007 and just over a year later, the €261m plant was connected to the national grid.
Given the vast area covered by the plant, the output of electricity is relatively small: an estimated maximum of 93 million kWh a year, enough to supply 30,000 Portuguese homes and to avoid annual emissions of more than 83,000 tonnes of CO2 from coal-fired power stations. Under the contract, Acciona is contributing €3m to finance renewable energy research in the region, train young people and supply wind and solar energy generators for homes and small businesses. It is channelling a further €500,000 into the local community. By far the biggest effect on the local economy, however, has come from 100 new jobs at the solar panel assembly plant that the company agreed to set up as part of its deal with the government. “An investment like this makes a big difference in a district with about 1,000 people out of work in a population of 16,000,” says Francisco Aleixo of Acciona. “The new skills and technology that come with the plant are also vitally important in an area with no industrial tradition.”
Creating industrial clusters around clean energy technologies is an essential component of the Pinho plan – and an idea endorsed in theory by everyone from The World Is Flat author Thomas Friedman to David Cameron to Gordon Brown. In the northern port of Viana do Castelo, close to the wind farms of the Alto Minho, workers on the dockside manoeuvre enormous rotor blades, concrete tower segments and other wind turbine components, readying them for shipment.
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The parts are produced at four quayside industrial units owned by Germany’s Enercon, a leading wind turbine company that supplies about 40 per cent of the Portuguese market. The plants, which began full production in 2008, will produce about 200 towers and generators and 600 rotor blades a year, 60 per cent for export. Four in 10 of the 1,000 young employees painting blades and casting concrete on the shopfloor are women, many of them retrained workers from Portugal’s ailing textile industry.
Over the past four years, Pinho says, Portugal has created 10,000 jobs in the clean energy sector and he estimates another 22,000 will be added over the next 12 years, the result of €14bn due to be invested in renewable energy and related industrial projects. “Industrial policy has a bad reputation in Anglo-Saxon countries, but it can be used for good purposes,” he says. “We are already demonstrating the success of the ideas promoted by President Obama, the concept of using clean energy to combat climate change, reduce external energy dependency and deliver an important stimulus to the economy.”
He acknowledges, however, that wind and solar panel technologies are already too far advanced for Portugal to become a frontrunner in research and development. Instead, Pinho has set his sights on making the country a world leader in the emerging field of wave energy.
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In the busy port of Leixões in Porto, Portugal’s northern capital, engineers speaking Portuguese with heavy Scots accents are evidence of this drive. They work for Edinburgh-based Pelamis Wave Power, whose technology is widely considered to be two to three years ahead of competitors in the race to produce electricity from the sea on a large-scale basis. Portugal has designated a maritime zone for wave power projects and signed the world’s first commercial contract to sell wave energy to the national grid with the promoters of the Pelamis project.
Three wave energy converters, linked steel tubes each the size of three railway carriages, have been undergoing operational tests off the small Atlantic beach of Aguçadoura, about 40km north of Porto. Early this year, the red Pelamis converters, named after a mythical sea snake, were towed to Leixões for modifications. “Producing electricity from the sea is the exact opposite of inventing something like the sewing machine,” says Rui Barros, a board member of the company responsible for the project. “Rather than a stroke of individual genius, success depends on painstakingly resolving hundreds of small problems until you achieve commercially viable production. It’s a marathon rather than a sprint.”
The Pelamis machines generate electricity when waves cause the hinged joints of the semi-submerged cylinders to move, pumping oil at high pressure through hydraulic motors. The main challenge is to build converters that can withstand the aggressive and constant impact of ocean waves. Portugal has the capacity to produce 20 per cent of its electricity needs from waves, says Barros. This would mean installing a capacity of 5,000MW along 250km of the country’s coastline (out of a total of 600km), and would require thousands of converters – the three now in operation have a combined capacity of only 2.25MW. The government is so far targeting a more modest 250MW of installed wave capacity by 2020.
But the real prize in the wave energy race is industrial production. If companies based in Portugal can produce wave energy that is commercially viable in both quantity and price, the country would be well-placed to become a world leader in the technology. Daniel Roos, an engineering systems professor at the Massachusetts Institute of Technology, says Portuguese wave energy researchers are already more advanced than his MIT colleagues. “What North Sea oil and gas did for Scottish industry, wave energy can do for Portugal,” says Barros.
He expects environmental and demand pressures to drive the development of wave technology at an even faster pace than wind power. “The need to stop burning carbon fuels and to power electric vehicles will become intense. I’m convinced wave energy will gather momentum very quickly towards large-scale production.”
Wave energy is in its relative infancy, but its proponents take heart from the rapid advances of other renewable technologies and the benefits that have flowed from them. Residents of the Alto Minho’s isolated granite villages are already enjoying the fruits of Portugal’s clean energy revolution. Land rent from wind farm operators has doubled the annual budgets of local parish councils, who have used the money to restore churches, build football grounds and install new water and sanitation systems. Unsurprisingly, there is little dissent here from what Pinho says is a national consensus in favour of his ambitious energy plan. In a remote region imbued with the spirit of an ancient past, the turbines looming out of the mist on the summits of the Alto Minho serras address the future.
Peter Wise is the FT’s Portugal correspondent
