Portugal wants to develop floating wind farms, but investor interest is being held back by regulatory uncertainty

Last year, around 50 companies from 10 countries expressed non-binding interest in bidding for Portugal’s first commercial floating wind project. The Portuguese government planned to auction 3.5 GW of capacity in 2024 and 10 GW by 2030. The country is well placed to develop offshore wind power, but further progress is being held back by an uncertain regulatory framework.

Portugal’s deep Atlantic coastline offers great potential for deploying floating wind farms. According to Anna Pirrone, a manager at consultancy OWC, Portugal also benefits from an established supply chain and several ports that can be modernised. Its close proximity to Spain also provides access to a large number of offshore wind manufacturers and potential energy export opportunities.

Portugal already has a small 25 MW floating wind project off its Atlantic coast, owned by Ocean Winds. In an effort to expand this capacity, Portuguese government authorities launched the preparatory process last year for the first auction of licences to build wind farms off the Atlantic coast.

According to information about the auction, floating wind farms are expected to be installed in deep waters, where winds are stronger and more consistent. This will enable them to generate more energy than wind farms fixed to the seabed near the coast or located on land.

Companies that expressed interest include Equinor, Repsol, RWE and Iberdrola. However, Prime Minister António Costa’s resignation in November and the snap election scheduled for 10 March disrupted progress towards a stable regulatory framework and created uncertainty in the market.

Investors hold back due to regulatory uncertainty

According to Anna Pirrone, the key challenge for investors in floating wind farms in Portugal is now “the undefined regulatory framework and the path to market mechanisms,”. She said this during a discussion of pre-qualification and bidding models. “This factor is compounded by recent political uncertainty,” she said.

According to Reuters Events analysts, investors have decided to wait and see. However, some investors could lose interest because of the uncertainty, warned Carla Ribeiro, head of Offshore Wind Advisory for the UK and Ireland at engineering and consultancy group Ramboll.

According to a renewable energy-focused Reuters source, political uncertainty in Portugal comes at a time when several major offshore wind developers are adjusting their global portfolios and focusing on key markets. This is opening a new phase of development after sharply rising costs and delays across a number of projects.

Floating wind turbines remain an emerging technology, but the successful installation of the 25 MW Windfloat Atlantic floating wind project off northern Portugal has helped demonstrate its risk profile. Windfloat Atlantic, which entered operation in 2020, generated 80 GWh in 2023, exceeding the operating company’s expectations. Analysts had been concerned about the strong waves off the Portuguese coast, but the structure proved resilient.