New IEA Report Says Portugal Is Rapidly Cleaning Up Its Power Sector But Must Accelerate Electrification To Meet Climate Goals

Portugal is continuing to make notable progress in reshaping its electricity system, supported by a diverse mix of energy technologies. A new report from the International Energy Agency (IEA) shows that while the country has built a strong foundation, more work is required across several sectors to meet its long-term climate and energy goals.

The rapid rise of solar photovoltaic installations, combined with steady output from hydropower and wind, has helped Portugal achieve one of the lowest-carbon electricity systems among IEA member countries. This shift has strengthened the country’s energy security and reduced dependence on imported energy.

However, the IEA’s latest Energy Policy Review notes that Portugal must accelerate electrification in sectors such as transport, buildings, and industry, while also modernising and expanding its grid infrastructure to fully benefit from its renewable power generation.

According to IEA Deputy Executive Director Mary Burce Warlick, Portugal’s strong progress in renewable electricity provides a promising platform, but future emissions reductions will rely heavily on electrifying the broader economy.

She emphasised that electricity will become even more central to both energy security and economic growth, and called for grids, markets, and investment frameworks to evolve in line with rising electrification needs to maintain affordability and resilience.

The review is being launched in Lisbon by Warlick, alongside Portugal’s Deputy Minister for Energy Jean Barroca and key figures from the national energy sector. It offers a detailed evaluation of Portugal’s current energy policies and outlines recommendations aimed at ensuring an energy system that remains secure, affordable, and focused on the needs of people.

Portugal’s National Energy and Climate Plan (NECP) sets ambitious targets for 2030 and outlines a pathway toward climate neutrality by 2045. To achieve this, the IEA suggests creating a national roadmap that brings together sector-specific commitments.

Such an approach could improve coordination, align investment efforts, and provide greater clarity for all stakeholders involved in the transition.The report notes that electricity demand is increasing as more households, businesses, and industries adopt electric technologies.

At the same time, higher shares of solar and wind power are creating a greater need for flexibility, such as energy storage, demand-side management, and other tools that help balance the system in real time.Strengthening the country’s transmission and distribution networks will also be crucial. Investments are required to integrate new renewable generation, support growing electrification, and expand cross-border electricity trade within the Iberian market.

The review also points to the need for better coordination between transmission and distribution system operators, as well as alignment between national and local planning processes.As electricity becomes more central to the wider energy system, ensuring sufficient system flexibility will be essential. The IEA recommends creating a flexibility roadmap based on different future scenarios, increasing market-based procurement of system services, and lowering barriers for new technologies to take part in these markets.

While the electricity sector has advanced quickly, sectors that rely on energy at the consumer level are not progressing as fast. Transport has become the country’s largest source of emissions, largely due to an ageing vehicle fleet. Even though electric vehicles made up a significant share of new car sales in 2025, their overall presence in the total fleet is still small.

To address this, the IEA suggests measures to encourage the purchase of used electric vehicles, faster expansion of charging infrastructure, and stronger policies that encourage public transport and rail travel.In industry, emissions have remained mostly unchanged.

The IEA recommends developing a clear industrial strategy with specific pathways for different subsectors to help guide investment, improve competitiveness, and take advantage of Portugal’s low-carbon electricity to build new value chains.

For buildings, the report highlights that improving energy efficiency and accelerating deep renovations will be vital in reducing energy costs for households.The IEA’s policy reviews are conducted regularly for its member countries. These assessments are designed to support policymakers and promote the exchange of best practices and experiences from around the world.