If Portugal wants to maintain investor confidence in its energy sector then it must “follow the principles of transparency, predictability and certainty”, says the International Energy Agency.

And it has also urged the government to build stronger energy links between the Iberian Peninsula – comprising Portugal and Spain – and France.Windpower on the rise in Portugal

Portugal has been working to deliver a financially sustainable energy system in the wake of its so-called tariff deficit, which was caused by several years of imbalances between the electricity system’s regulated costs and revenues from regulated tariffs.

Speaking at the launch of an IEA review of Portuguese energy policies, IEA Executive Director Fatih Birol said: “Portugal has made some difficult choices, but to maintain investor confidence, it must also closely follow the principles of transparency, predictability and certainty if the country wishes to continue to remain attractive to further investment in the energy sector.”

Eliminating the tariff debt by 2020 is a significant challenge, the IEA report adds, but Portugal must remain on the path towards a financially sustainable energy system.

The IEA report acknowledges that Portugal has weathered difficult economic times and Birol praised the government for increasing renewable energy deployment, notably wind power, which alone provided almost a quarter of electricity generated last year.

The IEA also welcomed Portugal’s updated energy strategy, which places greater emphasis on renewable energy and energy efficiency activities, and also focuses on efforts to lower investment costs and strengthen national competitiveness.

The IEA also urged Portugal to reinforce interconnections with transnational European electricity and natural gas networks. The first new interconnection between the Iberian Peninsula and France in almost three decades was inaugurated just over a year ago, and more capacity is being planned. “After decades of limited results, the IEA is pleased to see movement in the right direction, but these are only first steps,” said Birol. “More interconnection capacity is needed for such efforts to show their full value to Portugal.”