International Energy Agency has said Portugal can strengthen its energy security and economic resilience through greater electrification, but warned that further efforts will be needed in grid infrastructure, investment planning and end-use sectors to meet the country’s climate and energy goals.
In a new Energy Policy Review launched in Lisbon, the IEA highlighted Portugal’s rapid progress in renewable electricity generation, driven by strong solar PV growth alongside hydropower and wind energy. According to the report, Portugal now has one of the lowest-carbon electricity systems among IEA member countries, helping reduce energy imports and improve energy security.
However, the agency said additional progress will be required in sectors such as transport, buildings and industry to fully realise the benefits of electrification and reduce exposure to fossil fuel price volatility.
Mary Burce Warlick, Deputy Executive Director of the IEA, said electricity is becoming increasingly central to both energy security and economic development as emissions reductions depend more heavily on economy-wide electrification.
Warlick said ensuring that “grids, markets and investment frameworks evolve in step with electrification” will be critical to maintaining affordability while sustaining Portugal’s energy transition.
Rising electricity demand and grid investment needs
The report notes that electricity demand in Portugal is already beginning to rise as electrification accelerates across transport, buildings and industrial sectors.
At the same time, the growing share of solar and wind generation is increasing the need for system flexibility, including battery storage, demand-side response and other balancing resources capable of supporting grid stability in real time.
The IEA said more integrated and forward-looking grid planning will be essential, with investments needed in both transmission and distribution infrastructure to integrate new renewable generation, support electrification and strengthen cross-border electricity trade within the Iberian market.
The agency also called for stronger co-ordination between transmission and distribution system operators, as well as better alignment between national and local planning processes.
Recommendations for transport, industry and buildings
Portugal has established ambitious climate targets under its National Energy and Climate Plan (NECP), including goals for 2030 and a pathway to climate neutrality by 2045.
To support these objectives, the IEA recommended the development of a national roadmap based on sector-specific agreements to improve co-ordination, align investments and provide clearer signals for stakeholders.
The report identified transport as Portugal’s largest source of emissions, driven by an ageing and inefficient vehicle fleet. Although electric vehicles represented a significant share of new car sales in 2025, their overall share in the national fleet remains limited.
The IEA recommended expanding incentives for used electric vehicle sales, accelerating charging infrastructure deployment and strengthening support for public transport and rail.
In the industrial sector, emissions have remained broadly unchanged in recent years. According to the agency, Portugal will need a clearer industrial strategy with dedicated subsector pathways to support investment, improve competitiveness and leverage the country’s low-emissions electricity system to develop new industrial value chains.
For the buildings sector, the report highlighted the importance of improving energy efficiency and accelerating deep renovation programmes to lower household energy costs.
The review was launched in Lisbon by Mary Burce Warlick together with Jean Barroca, Portugal’s Deputy Minister for Energy, alongside representatives from the energy sector.