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Portugal: Incentive Scheme Fails While Sales Take Another Dive

Submitted by Baerbel Epp on May 3, 2016
The latest Portuguese incentive scheme for solar thermal energy proved to be a major failure: Launched by the national Energy Efficiency Fund (EEF) in May 2015, the call to support the restoration of solar thermal systems installed before 2005 received only four applications in the end. Additionally, 2015 market performance was still far from desirable, and the downward trend in sales continues. APISOLAR’s figures show a newly installed area of 46,134 m² (32 MWth), a 9 % decrease compared to the previous year.
 

Why did the call for system restoration (Aviso 12) with a budget of EUR 500,000 fail? First, there were the requirements for project eligibility: The call only allowed non-profit entities as beneficiaries, in particular private welfare institutions and sports associations of public utilities. Consequently, eligibility was narrowed to a very small share of an already small number of installations in existing non-residential buildings.
 
Second, the systems had to have been commissioned prior to 2005 – before the solar obligation for newbuilds came into force and before the majority of the installations in operation today were even set up. According to ESTIF, Portugal had an installed area of 160,950 m² (113 MWth) in operation in 2005 (14.8 % of the cumulated area by the end of 2014 – 1,080,317 m²).
 
Few before-2005 installations do not justify separate programme
Another problem was caused by the eligible costs. The scheme reserved EUR 50,000 from the total budget for energy audits in order to identify any anomalies and malfunctions; EUR 450,000 were allocated to the repair of solar systems. Eligible measures did not include the replacement of tanks and collectors, but were only intended to: 
  • Replace thermal insulation of pipes and related components;
  • Replace or repair recirculation groups, control systems, valves which were part of the solar circuit, air-ventilation valves, expansion vessels, heat exchangers and heat transfer fluids; 
  • Fix leaks;
  • Replace pipes in the solar circuit and components in the support structure. 
The application period lasted from May to the end of November 2015 and had two phases. The first phase was dedicated to solar thermal system suppliers, of which 36 qualified for the scheme. The second phase addressed the beneficiaries. The results were announced in March 2016: Ultimately, the programme administrators received and approved four applications with a grant volume of a mere EUR 7,919. All indications point to the remaining budget being allocated to other EEF calls, in which demand has surpassed the funds available. 
 
The solar industry viewed the call with scepticism. “The restoration scheme didn't make sense,” said Victor Júlio, Vice President Solar Thermal at the national solar industry association APISOLAR. “The old installations are not as old, nor as many to justify such a support scheme. It refers to installations previous to the boom [triggered by incentive scheme Medida Solar Térmico in 2009 and the solar obligation for newbuilds],” he said.
 
Scheme recognises need for upgrading underused solar thermal systems
Even so, there were 36 companies willing to participate in the call. Their main reason: an increased awareness for the need of maintenance activities in solar water heating. “Given the current situation, we can only hope that such incentives lead to a search for repair solutions and preventive maintenance,” Gonçalo Elias from renewable system supplier Sotecnisol Energia said. 
 
Although Duarte Barradas Cornacho from KeepOn admitted that the call did not have a “significant impact on my business”, he praised the initiative as “recognising the need to restore many solar systems which are underused and represent an investment with no return to their owners.” KeepOn specialises in operating, maintaining and optimising heating and cooling systems.
 
According to Filipe Lourenço, Manager of Procifisc, a construction and technical consulting company, there is another upside to the call: The beneficiaries selected are the ones who need this kind of incentive the most. “The majority of installed systems is younger than 2006, so these systems are not covered by the incentive scheme. Anyway, there is always a niche for which we can prepare the application and being able to support a welfare institution has already been a big help,” he explained.
 
Website of companies and institutions mentioned in the article:
 
This news piece was written by Filipa Cardoso, Editor of Portuguese magazine Edifícios e Energia (www.edificioseenergia.pt), which publishes news and articles about the solar thermal sector.
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