Government implements European Electricity Market Design Directive (EMD) to accelerate renewables and give the market stability

Government implements European Electricity Market Design Directive (EMD) to accelerate renewables and give the market stabilityGovernment implements European Electricity Market Design Directive (EMD) to accelerate renewables and give the market stability

• New legal framework for the electricity market, already approved by the President and which transposes the EMD enshrines the (Two-way Contracts for Difference (2w-CfDs): stable prices for consumers and confidence for those who invest in Portugal
• Top priority is repowering the existing wind farms - more production and more efficiency in the sites where the farms are installed without further impact on the territory
• Each additional renewable megawatt does not depend on imported fossil fuels - less exposure of people and businesses to international crises.

Maria da Graça Carvalho: "Greater price predictability, revenue stability, and a more robust system"

The Government amended Decree-Law 15/2022 to enshrine into the legal framework the Two-way Contracts for Difference (2w-CfDs). The principle behind them is simple: when market prices rise above the reference amount, the different goes back into the electricity system and consumers; when they drop0, the investment is protected. It is a price insurance for the people and for businesses and for those who invest in the country. This bill has already been approved by the President.

The Government is preparing, in articulation with the service regulator ERSE, the enforcement of these medium- and long-term contracting mechanisms with a priority given to repowering the existing wind farms. The Two-way Contracts for Difference are defined and were set as mandatory under the European Union Electricity Market regulations.

The fact that Portugal was a pioneer in wind energy means that a significant part of the national wind farms are coming close to the end of the equipment's useful life. Replacing the current wind turbines with modern technology enables a significant rise in production and efficiency on the same sites, making the most of the verified resource and the existing grid connections.

This reinforcement is decisive to meet the National Energy and Climate Plan 2030 targets and the Government's goal to cut to half the national fossil fuel dependence by 2034.

Portugal is starting off from a strong position: in the first half of 2026, more than 80% of the electricity produced on national soil was renewable, the second highest in the EU and, in 2025, according to the regulator, Portuguese consumers had cheaper electricity than the EU average.

"The Tw-way Contracts for Difference are an instrument that will offer greater price predictability, revenue stability and a more robust electricity system, safeguarding the proper market functioning. They will be particularly relevant for greater risk and greater investment technologies, such as wind power, where we can increase significantly the production in the farms that already exist", stresses the Minister of Environment and Energy Maria da Graça Carvalho.

The mechanism design, the respective parameters and scheduling will be announced in due time. The energy transition is the shortest path to stable prices and national energy sovereignty.