Micro-generation – the new laws

By Colin Reid [email protected]

Engineer Colin Reid is the general manager of Lagos-based company Enova Group, whcih continues to pioneer new technology in the Algarve.

The new micro-generation law for grid connected Photovoltaic (PV) solar systems in Portugal was released last month.

The new legislation will provide a fixed rate of 40 cents/KWh for the first eight years followed by 24 cents/KWh for the following seven years, thereby giving guaranteed rates for 15 years.

PV solar panels generate electricity. They do this by converting the light from the sun into DC (direct current). An inverter then changes the DC to AC (alternating current) which can then be connected into the national grid and sold back to EDP via a separate outgoing meter.

There has been much scepticism in Portugal about the reality of selling energy to EDP but with this and the previous legislation, it really is possible and is actually happening on a residential level.

The new law states that EDP is obliged to purchase the electricity generated for a period of 15 years at the rates mentioned above.

Instead of providing grants as in other countries such as Spain and Germany, the incentive in Portugal is through the price paid by EDP for the electricity produced.

In the past, it has not been financially viable to invest in this type of technology because of the high cost of the equipment and the additional cost of batteries to store the electricity.

Pay back times were far too long. It is now much more viable not only because it is possible to sell the energy back at inflated prices but also because batteries are not required, therefore, reducing the cost of the equipment.

The application process involves registration followed by the actual application over the internet. Once approved, the system must be installed within 120 days.

In order to qualify, you will also need a thermal solar system for producing sanitary hot water. Many homeowners already have this anyway but if not, this system is well worth installing as it will generate hot water for most of the year and is not expensive to install.

The maximum capacity of system to sell back to EDP at these rates will be 3.68 KW for residential properties or 11.04 KW for condominiums.

The PV systems can either be fixed type (mounted on a roof or on the land with a support structure) or tracker type (motorised to follow the sun´s path).

Return on investment can be made in about six to eight years, which makes real financial sense bearing in mind the rates are guaranteed for 15 years and the solar panels carry warranties up to

25 years.

It is important to act quickly though to maximise pay back because:

1. The rate of IVA is expected to increase next year

2. The feed in tariffs will reduce year on year

Many banks in Portugal are now providing finance for these schemes. This means that the initial investment is covered by the bank and the money generated used to pay off the loan.

There is normally more money generated than required to pay off the loan and thus a monthly income is also possible.

The whole process of registration, installation and final connection is best carried out by qualified organisations based here in the Algarve.

For more information, please contact Enovagroup on 282 770 080 or [email protected]