Portugal

Country: Portugal

Document type: National Strategy

Title: Portugal National Hydrogen Strategy (EN-H2) (Portuguese language)

(English language enabled of the Resolution of the Council of Ministers)

Released: July 2020

Summary Points:

  • The Strategy sets several objectives for (green) hydrogen deployment by 2030, including:
    • 2-2.5 GW of installed electrolyser capacity
    • 10-15% hydrogen injection into natural gas networks
    • 2-5% hydrogen in the energy consumption of the industry sector
    • 1-5% hydrogen in the energy consumption of road transport
    • 1.5-2% hydrogen in final energy consumption
    • Creation of 50-100 hydrogen fuelling stations
  • Implementation of the Strategy is in three phases:
    • Phase 1 2020-2023 – adopting the regulatory framework, reviewing/implementing investment support measures, small-medium projects approved, designing R&D incentives, starting the Sines industrial project
    • Phase II: 2024-2030 – strengthening the regulatory framework, enhancing support mechanisms with EU funds, varied scale projects implemented nationwide, implementing the large-scale Sines project (with a planned installed electrolyser capacity of at least 1 GW by 2030)
    • Phase III 2030-2050 – consolidating hydrogen as a decarbonisation instrument

Complementary to the Strategy, in September 2020, the Portuguese and Dutch Governments signed a Memorandum of Understanding “to affirm their intention to connect Portugal’s and the Netherlands’s 2030 hydrogen plans and develop a strategic export-import value chain to ensure production and transport of green hydrogen from Portugal to the Netherlands and its hinterland via the ports of Sines and Rotterdam.”

In October 2022, it was reported that Spain, Portugal and France had agreed to build a sea-based pipeline (H2Med) to carry hydrogen and gas between Barcelona and Marseille. In December 2022, it was further reported that the pipeline would be exclusively dedicated to green hydrogen, would cost around €2.5 billion, would have capacity to transport two million tonnes of hydrogen per annum, and should be completed by 2030. The report noted that the three countries would submit the project to the European Commission (EC) for declaration as a ’project of common interest’. In January 2023, it was announced that, as part of a French-German declaration, the two countries would take the necessary steps on a European backbone for hydrogen transport across Europe, including the necessary national and transnational hydrogen infrastructures and, in particular, the extension and connection of existing and planned infrastructures, including extension of the H2Med pipeline to Germany in close cooperation with involved partners. 

In January 2023, media reports indicated that the Portuguese Government had published measures to launch new auction schemes for offshore wind and renewable gas. It is anticipated that the first auction would be held in 2023 with a (reported) award of 10-year contracts for approximately 3,000 tons of green hydrogen and 10,000 tons of renewable methane per annum. It is reported that the purchased products would be on-sold to gas suppliers for blending into natural gas networks.

In July 2023, press reporting indicated that Portugal, in its updated draft National Energy and Climate Plan, had increased its target for electrolyser capacity to 5.5 GW, up from 2.5 GW. Solar capacity and onshore wind capacity targets are put at 21 GW and 10.4 GW respectively.

Funding Support

Media reporting (August 2023) noted public funding support for the production of hydrogen and renewable gases based on information provided by the Ministry of the Environment and Climate Action.

Recovery and Resilience Programme – €185 million

  • First round – €102 million allocated, total of €229 million investment, 25 new projects, installed capacity of 106 megawatts (MW).
  • Second round – €83 million allocation, grant process underway (as of August 2023).

REPowerEU – €70 million

  • Allocation of €70 million announced (August 2023) under REPowerEU though no timeline for launch announced.

Media reports indicated that in December 2023, the EC announced that it had authorised a €140 million Portuguese scheme to support the production of renewable hydrogen and biomethane. It is reported that the scheme, adopted by the Commission in March 2023 and amended in November 2023, will take form of a variable premium under a two-way contract for difference concluded for a duration of 10 years.  In May 2024, media reports indicated that the Government announced the launch of an auction for the centralised purchase of hydrogen and biomethane, €140 million.

In March 2024, the EC announced approval, under the State aid Temporary Crisis and Transition Framework, of a €350 million Portuguese scheme to support investments for the production of equipment necessary to foster the transition towards net-zero, including amongst other things for electrolyser manufacture. The scheme will take the form of direct grants.

In September 2024, the EC approved, under the State aid Temporary Crisis and Transition Framework, a €1 billion Portuguese scheme to support investments for the production of equipment necessary to foster the transition towards a net-zero economy. The measure will be open to companies producing relevant equipment, namely batteries, solar panels, wind turbines, heat-pumps, electrolysers, equipment for carbon capture usage and storage, as well as key components designed and primarily used as direct input for the production of such equipment or related critical raw materials necessary for their production. Under this measure, the aid will take the form of direct grants.

In February 2025, the European Investment Bank announced it had granted a €430 million loan for two projects, already in construction at Galp’s Sines Refinery and which represent a total investment of €650 million.

  • The Biofuels unit will receive €250 million of financing and will produce low-carbon fuels.
  • The renewable hydrogen production unit (100 MW) will receive €180 million in financing and will be capable of producing 15,000 tons of renewables-based hydrogen per annum. Both projects are planned to be operational in 2026.

 

Reviewed: March 2025