How much room for a competitive electricity generation market in Portugal?

Although the Portuguese electricity market was fully liberalized in 2006 and Iberian Electricity Market operators were set up some years ago, almost all electricity generated in Portugal benefits from a State guaranteed price, independent of market behavior. This applies not only to producers using renewable energy sources and cogeneration under feed-in tariffs, but also to all conventional power plants that undersigned a Power Purchase Agreement in the 1990s. This paper assesses current and future amounts of electricity traded without State guaranteed price and identifies the main challenges facing the transition towards a competitive Portuguese electricity generation market in the next two decades. The electricity market of the future, freed from the present legacy generation contracts, will have to promote economic efficiency within a complex multi-variable climate/energy policy framework. (C) 2012 Elsevier Ltd. All rights reserved.