Portugal is making strong progress in transforming its electricity system, underpinned by range of energy technologies, but further efforts are needed across multiple sectors to realise its ambitious targets, according to a new report by the International Energy Agency.
Due to the rapid growth of solar PV in recent years, alongside continued contributions from hydropower and wind, Portugal's electricity generation now has one of the lowest carbon intensities among IEA Member countries. This has strengthened the country's energy security and reduced reliance on imports, according to the new Energy Policy Review by the IEA. However, greater progress on electrification of end uses in sectors such as transport, buildings and industry - as well as improvements in network infrastructure - will be required to fully realise these benefits while also reducing reliance on energy imports and exposure to price volatility, according to the report.
"Portugal has built a strong foundation through rapid progress in renewable electricity," said IEA Deputy Executive Director Mary Burce Warlick. "As emissions reductions increasingly depend on electrification across the economy, electricity becomes central to both energy security and economic development. Ensuring that grids, markets and investment frameworks evolve in step with electrification will be critical to sustaining progress while maintaining affordability."
The Deputy Executive Director is launching the review in Lisbon today together with Portugal's Deputy Minister for Energy Jean Barroca and key stakeholders from the energy sector. The report provides a comprehensive assessment of Portugal's energy policies and sets out recommendations to support a secure, affordable and people-centred energy system.
Portugal has set ambitious targets through its National Energy and Climate Plan (NECP), with clear objectives for 2030 and a pathway towards climate neutrality by 2045. To support this, Portugal can develop a national roadmap based on bottom-up sectoral agreements to improve co-ordination, align investment and provide greater clarity for stakeholders.
The report highlights that electricity demand is already starting to rise as electrification accelerates across transport, buildings and industry. At the same time, the growing share of solar and wind generation is increasing the need for system flexibility including storage, demand-side response and other resources that can support real-time system balancing.
More integrated and proactive grid planning will be essential. Investment is needed in both transmission and distribution networks to integrate new generation, support electrification and enhance cross-border power trade within the Iberian market. The report also highlights the importance of improving co-ordination between transmission and distribution system operators and aligning national and local planning processes.
As electricity takes on a greater role in the wider energy system, ensuring adequate flexibility will be increasingly important. The IEA recommends developing a scenario-based flexibility roadmap, expanding market-based procurement of system services and removing barriers to participation for new technologies.
While the electricity sector has advanced rapidly, progress in end-use sectors has been more gradual. Transport is now the largest source of emissions, driven by an ageing and inefficient vehicle fleet. Although electric vehicles accounted for a significant share of new sales in 2025, their share in the total fleet remains limited. The IEA recommends expanding support for sales of used electric vehicles, accelerating the rollout of charging infrastructure and strengthening policies to encourage a greater use of public transport and rail.
In Portugal's industrial sector, emissions have remained broadly unchanged in recent years. A clear industrial strategy with subsector pathways is needed to guide investment, support competitiveness and leverage Portugal's low-emissions electricity to develop new value chains, according to the report. For buildings, improving energy efficiency and accelerating deep renovations will be essential to reduce costs for households.
The IEA regularly conducts peer reviews of the energy and climate policies of its Member countries. These reviews provide recommendations to support policy development and encourage the exchange of international best practices and experiences.
