On January 4, the Portuguese government announced plans to tender for the supply of renewable hydrogen and biomethane as a way to replace natural gas.
The tender process will support natural gas suppliers in replacing 1% of their natural gas with renewable hydrogen or biomethane, provided their supply to final customers exceeds 2,000GWh per year.
No specific date has been set for the auction at this time. According to the ordinance, the exact procedures for the tender must be submitted to the government by the Directorate-General for Energy and Geology by May 30, 2023, and be published by June 30. The document outlining these plans was signed by the secretary of state for the environment and energy, João Saldanha de Azevedo Galamba, on December 30.
In an effort to make it easier for production facilities to be built, the Portuguese government also eliminated mandatory environmental assessments for green hydrogen projects last month.
Based on data from ICIS, Portuguese gas demand in 2022 totaled around 60TWh, which would require 600GWh per year of renewable hydrogen or biomethane to replace 1% of natural gas. The
Portuguese government plans to establish 120GWh per year of renewable hydrogen and 150GWh per year of biomethane, offering subsidies of up to €127/MWh for hydrogen and €62/MWh for biomethane.
These contracts are expected to be valid for 10 years. To qualify for the contract, producers will need to obtain authorization to connect to the gas transmission system, which could allow for hydrogen production to be fed directly into the gas network and potentially reduce overall project costs.
The purchasing mechanism did not specify any particular conditions for the production of hydrogen, other than stating that it must be produced using renewable electricity and electrolysis.
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