Portugal opens the door to BESS and hybrid retrofits — but will the system keep up?

Published July 2025

Portugal’s renewables sector is maturing fast — but the permitting regime hasn’t always kept pace. Retrofitting operational assets with battery storage and hybrid technology offers huge potential, but strict regulations have slowed the progress so far. Benoit Ribeaud, technical advisor at Everoze, unpacks the impact of Decree-Law 99/2024 — and explores why this long-awaited fast-track could make a difference, if implementation catches up with ambition.

Portugal’s renewables sector is growing up quickly. Curtailment is increasing, flexibility is scarce, and grid connection queues are crowded. For many asset owners, the obvious answer — retrofitting with storage or wind — has long been obstructed by red tape.

With the approval of Decree-Law 99/2024, that’s starting to change. Published in December, this legal update simplifies the process for retrofitting existing renewable energy projects with battery storage and/or hybrid generation components.

Fast track opportunities for curtailment relief

Curtailment is no longer a theoretical risk in Portugal. Regions like Alentejo and Algarve are already feeling the pinch — with solar projects producing below capacity during peak hours. For asset owners, this translates to underperformance, lost revenue, and eroded IRRs.

Battery systems and hybridisation offer a way out but have always been burdened with further licensing which often outweighed the commercial benefits. With DL 99/2024, a 100 MWp solar plant could add up to 20 MW of co-located BESS or wind under a simplified procedure — allowing for arbitrage, self-consumption optimisation, or peak shaving to reduce grid strain.

Shared connection points are now allowed even with different legal owners, thanks to a new mechanism for shared injection rights and separate grid operation agreements, legal barriers regarding co-ownership of a plant have also been lifted, paving the way for more creative configurations and business models.

Breathing room for developers

DL 99/2024 has approved the retention of injection rights ensuring that, even if a production license is revoked, operators may maintain access to the injection point under certain conditions — potentially supporting asset restructuring or repowering.

Land access has been streamlined with administrative easements which can now be granted directly for retrofits and extensions on state-owned land, improving deployment prospects where space is available.

REN has also clarified an even faster route for behind-the-meter storage which can bypass the queue altogether if no additional grid capacity allocation is required, creating opportunities to:

  • enhance yield without expanding the grid footprint,
  • improve market responsiveness through storage,
  • delay or reduce curtailment impacts, and
  • extend asset lifetime and adapt to evolving revenue models.

Public funding pushes the transition even further

In mid-2024, the Portuguese government launched a €99.75 million competitive tender under the PRR (Recovery and Resilience Plan). The aim: to support the deployment of at least 500 MW of battery-based storage and grid flexibility measures.

The response was strong with 79 valid applications, and 43 projects selected for funding. Projects were assessed based on location, technical maturity, and developer track record, and saw major players like Iberdrola and Galp secure funding.

This funding boost confirms the sector’s readiness — but also highlights the need for clear execution pathways to ensure the regulatory and financial frameworks can deliver on their promise.

A smart update — but not a silver bullet

The DL 99/2024 is a clear effort to reduce administrative bottlenecks, align with EU targets under RED III, and make better use of existing infrastructure and shows that Portuguese regulators are paying attention to system needs. These measures aim to support flexibility, resilience, and better grid usage — while also reflecting how co-located storage is evolving on the ground. The updates are backed by REN’s February 2025 Guidelines for Using Capacity Reservation in Electricity Storage Facilities adding further operational clarity — particularly around how different types of BESS are treated in the grid connection process.

As always, despite the welcome changes, there is still work to be done. TSO/DSO coordination needs strengthening now that shared connections with different legal owners are permitted, as operational clarity on roles, responsibilities, and liabilities is lacking. Environmental thresholds and reviews may still trigger delays, especially in sensitive areas or where cumulative impacts are unclear, and although RED III calls for urgent resolution of permitting requests, the national legal framework doesn’t yet specify clear deadlines or legal recourse pathways.

Law is only part of the equation. The real test lies in execution: how environmental authorities, grid operators, and municipalities interpret and process retrofit requests, whether investors can count on revenue certainty, and if the system has the capacity to meet the rising demand for flexible asset upgrades.

For now, DL 99/2024 is a tool — not a guarantee. But in the right hands, it could help unlock one of Portugal’s most exciting decarbonisation opportunities: getting the most out of what we’ve already built.