IN Brief:
- The IEA has warned that grid capacity is constraining Portugal’s renewable deployment and electrification.
- Transmission upgrades in REN’s 2025–2030 plan include schemes approved in previous cycles that remain undelivered.
- Portugal is moving toward more dynamic hosting capacity, flexible connections, hybridisation, and digital grid operation.
The International Energy Agency has identified grid capacity as a constraint on Portugal’s renewable energy deployment and electrification, with network expansion struggling to keep pace with the country’s power system needs.
Portugal has made progress in expanding grid capacity and modernising network development, but the IEA’s 2026 energy policy review states that capacity is not increasing quickly enough. A significant share of the major transmission upgrades included in REN’s 2025–2030 plan had already been approved in previous planning cycles but remains undelivered.
At distribution level, a growing number of substations are approaching their limits, while available firm capacity is further constrained by bottlenecks at the interface between the distribution and transmission systems. Portugal’s energy regulator has also identified technical hosting capacity on the transmission network that cannot be allocated because it is tied to firm commitments for projects that are still under development.
The result is a system in which available capacity can remain underused, even where renewable output, power flows, and local demand profiles would allow higher connection volumes under a more dynamic approach. Capacity is also committed to some combined-cycle gas turbine plants that are operating at much lower levels, adding another layer to the allocation problem.
Portugal has started introducing tools that could support more flexible grid operation. REN and E-REDES have begun deploying digital monitoring and data platforms, while E-REDES is piloting active low-voltage management and dynamic line rating. Hybrid connections now allow storage or complementary generation to be added to existing connection points without a full licensing process, and flexible connection conditions were adopted in 2025.
Those tools are still developing. Flexible connections are newly introduced and are not yet managed dynamically, while developers face uncertainty over curtailment volumes and access conditions. Hybridisation is also not yet embedded fully into planning and capacity allocation frameworks.
Portugal’s position reflects a wider European grid problem. Renewable targets are increasingly being tested by network capacity and operational flexibility rather than generation technology alone. Solar and wind projects can be developed more quickly than substations, overhead lines, underground cable routes, and transmission reinforcements, leaving connection queues to absorb the mismatch.
Where connection allocation remains static, projects can sit in queues while usable network capacity is locked behind slow-moving commitments. Firm capacity rules protect system security, but they can also limit deployment where assets are not being used in ways that reflect real-time network conditions.
Similar pressures are visible elsewhere in Europe. Austria may need more than €68bn of grid investment by 2040 as renewable targets, electrification, flexibility, and regional network constraints increase pressure on its power system. Across the continent, grid expansion is becoming a delivery bottleneck for decarbonisation strategies that were originally framed mainly around generation capacity.
Digitalisation is now moving into the core of network planning. Real-time hosting capacity, dynamic line rating, seasonal capacity windows, probabilistic planning, active low-voltage management, and better queue discipline can all increase the practical use of existing assets. These tools do not replace reinforcement, but they can improve utilisation while larger network projects move through design, consenting, procurement, and construction.
Connection queue management is also becoming more complex as demand-side requests increase. Industrial loads and data centres are adding to queues previously dominated by renewable and storage projects. That changes the planning challenge because new demand can be large, location-specific, and time-sensitive, while renewable generation may be competing for the same substations and transmission interfaces.
Portugal’s renewable progress gives it a strong platform, but the next phase depends on grid planning, capacity allocation, and operational systems becoming more flexible. The IEA’s review points to a system with several useful tools emerging, although not yet at the scale or maturity needed to match renewable deployment and electrification demand.
The full country review is available through the IEA’s Portugal 2026 energy policy review.
