AT THE BOARD OF
SELECTMEN: Trancoso
delegation gives a slide
tour of this small city in Portugal...May
17, 2007)...Selectmen vote to make Trancoso, Portugal, a "walled"
city, our newest "Sister
City"...Trancoso as it
sits in the country's map and news about Portugal.
P
O R T U G A L I N T H E N E W S
About
Trancoso...one of The
Historic Villages of Portugal
TRANCOSO CLOSE TO SPAIN - "IMPORTANT CENTRE FOR JEWISH HISTORY"
ACCORDING TO TOURISM BROCHURE; WESTON'S OTHER, VERY DIFERENT SISTER CITY.
Trancoso, Portugal (now a "sister city" of Weston, CT) - are we in
better shape fiscally?
One of
its activities - found on the Internet:
http://www.asa-art.com/facto/program/2007/OREZ1/en/en1.html
About Trancoso's history
http://www.asa-art.com/facto/fct/en8.html
How about a map of
our newest "sister city"...
Moody's cuts Portugal credit
ratings to junk
Reuters
By Walter Brandimarte and Daniel Bases | Reuters
5 July 2011
NEW YORK (Reuters) - Moody's Investors Service on Tuesday slashed
Portugal's credit rating into junk territory, saying there is great
risk the country will need a second round of official financing before
it can return to capital markets.
Heightened concerns that Portugal will not be able to fully achieve the
deficit reduction and debt stabilization targets set out in its loan
agreement with the European Union and International Monetary Fund
weighed on Moody's decision.
There also is an increasing probability that Portugal will not be able
to borrow at sustainable rates in the capital markets in the second
half of 2013 and for some time thereafter, Moody's said.
Portugal is facing formidable challenges in reducing spending,
increasing tax compliance, achieving economic growth and supporting the
banking system, the agency said.
Moody's cut Portugal's credit rating by four levels to Ba2. It is the
first of the Big Three ratings agencies to put Portugal's credit in
junk status. Standard & Poor's and Fitch Ratings both have Portugal
at BBB-minus, the bottom of the investment grade range.
Who pays for Portugal's mess?
I-BBC
Robert Peston | 10:32 UK time, Thursday, 7 April 2011
To start parochially, the exposure of the UK to the financial mess in
Portugal is comparatively limited.
According to figures from the Bank for International Settlements (the
central bankers' central bank, to use the cliche), British banks have
lent just $2.6bn (£1.6bn) to the Portuguese public sector.
And the total exposure of UK banks to Portugal - including loans to
banks and companies - is $33.7bn or £21bn. So even if
losses on all these loans - through defaults and restructuring -
escalated to an implausibly high 33% of value, there would be a
headache for our banks, though nothing much worse than that.
Which is one reason why the Chancellor George Osborne will minimise the
UK's contribution to the Portuguese bailout.
Quite apart from the political imperative for him of not being seen to
prop up a currency union, the eurozone, which doesn't include the UK,
the fortunes of the Portuguese economy and financial sector are not of
material concern to the UK - unlike Ireland, where British banks and
exporters are up to their necks in it.
That said, the UK cannot avoid providing any succour to Portugal. As a
result of our commitments to the International Monetary Fund and the
European Union's European Stability Mechanism (ESM) Britain could find
itself making an implicit contribution to a Portuguese bailout of as
much as 5bn euros - or as little as 1bn euros (depending on whether
Portugal taps the ESM or just the European Financial Stability
Facility, to which the UK does not contribute).
The risks, predictably, are greater for Spanish, German and French
banks, with $109bn, $49bn and $46bn of exposure to Portugal
respectively. But even in their cases, direct exposure to the
financially challenged Portuguese government is limited: just $33bn of
loans for all banks from the three countries together. And loans
to Portugal's public sector by all euro area banks (excluding loans by
Portuguese banks) are just $42bn in total.
So if Portugal were eventually to default or to write down the value of
its sovereign debt, the direct impact on the eurozone banking system
would be embarrassing rather than devastating. This however is to
ignore two other highly relevant concerns.
First is that if Portugal restructures its debts, so as to reduce what
it owes, that would probably only happen if Ireland and Greece engaged
in similar writedowns. And cross-border exposure of eurozone
banks to public-sector Irish and Greek debt is $80bn (of which $65bn is
Greek).
A writedown or haircut of Greek, Irish and Portuguese debt could cause
difficulties for some eurozone banks. And if such writedowns
triggered losses on bank-to-bank lending - which it probably would -
then the magnitude of potential bank losses starts to look
troubling. In this context, note that the exposure of just
Germany's banks to banks in Greece, Ireland and Portugal is $80bn.
Or to put it another way, Germany has a very powerful interest in
persuading Greece, Ireland and Portugal not to default - which, some
would say, isn't necessarily captured in bailout terms for Ireland and
Greece that are seen inside those countries as carrying punitive
interest rates. But in assessing the potential damage from the
admission by Portugal's caretaker premier that the country needs an
emergency loan, it is just as important to assess the vulnerability of
Portugal's domestic banks - and of the European Central Bank.
As I have pointed out here before (see my 30 November post, the
Perilous Condition of Portugal's Banks), Portuguese banks - financed by
the European Central Bank and the Central Bank of Portugal - have in
effect been funding the ballooning Portuguese government deficit.
Arguably, the European Central Bank and Central Bank of Portugal have
been lending to the Portuguese state - without admitting as much - with
Portugal's banks acting as agent.
Here are the statistics. From the end of December 2008, Portuguese
banks' exposure to Portugal's central government rose from 4.7bn euros
to 19.5bn euros. That is a jump of 15bn euros over a couple of
years, which represents around half of the Portuguese deficit in that
period.
Or to put it another way, Portugal's government was only able to borrow
what it needed by selling bonds because Portuguese banks were prepared
to buy these bonds. Now Portugal's banks were only able to lend
to the government because they in turn massively increased what they
borrowed from the European Central Bank and the Central Bank of
Portugal.
According to statistics published by the Central Bank of Portugal,
central bank lending to Portugal's banks increased from 14.4bn euros at
the end of 2008 to 49bn euros two years later, a rise of 36bn
euros. And much of that central bank lending is secured via repo
agreements on Portuguese government bonds (or loans to the Portuguese
government) held by Portugal's banks.
That means the ECB is massively exposed to the health of the Portuguese
state and to the health of Portuguese banks.
In this complex web of interconnected fortunes, it is also notable that
Portuguese banks' exposure to other banks has increased over the past
two years from 5bn euros to 30bn euros. Also, the ECB has
directly purchased perhaps a further 20bn euros of Portuguese sovereign
debt (according to analysts).
All of which is to say that any default or writedown of Portugal's
government debt would trigger a potentially destabilising chain
reaction of losses for Portuguese banks, for eurozone banks and -
perhaps most significantly - for the European Central Bank. Or to
put it another way, it is obviously a national humiliation for Portugal
that it has had to request a rescue from its eurozone partners.
But this is one of those cases where the struggling debtor, Portugal,
can be seen to be as powerful as the creditors, which include banks and
the European Central Bank. Default by Portugal might not be
catastrophic on its own for the stability and strength of the European
financial system - but if it were combined with defaults by Greece and
Ireland (which it very likely would be) then the consequences for the
integrity of the eurozone would be serious (and I will leave for
another time the implications were Spain to be the next domino to
tumble).
S&P cut leaves Portugal one notch above junk
Greece also downgraded on
restructuring worries, agency says
YAHOO
By William L. Watts, MarketWatch
March 29, 2011, 11:25 a.m. EDT
LONDON (MarketWatch) — Portugal was dealt another blow in its effort to
avoid a bailout after a further downgrade by Standard & Poor’s
Ratings Services left the country’s credit rating one notch above junk
status.
S&P lowered its rating on Portugal to BBB- from BBB, where it had
been placed last week following the resignation of Prime Minister Jose
Socrates. The premier announced his resignation after his minority
government was unable to win passage of additional austerity measures.
The agency said the cut was prompted by worries that a restructuring of
sovereign debt could be a prerequisite for borrowing from the European
Stability Mechanism, which will replace the European Union’s existing
bailout fund, known as the European Financial Stability Facility, in
mid-2013.
Obama: We prevented a Libyan massacre
WSJ's Laura Meckler reports on reaction to President Obama defending
the U.S. military action in Libya. Plus, a report on violence in Syria
and potential government resignations. And, efforts to avert a U.S.
government shutdown have broken down.
Also, the agreement on the ESM inked by EU leaders last week confirms
that senior unsecured government debt will be subordinate to ESM loans,
the agency said, unlike EFSF loans, which are on an equal footing with
other loans.
Both features will be “detrimental” to commercial creditors of any
country that uses the ESM, S&P said in a statement.
“Given Portugal’s weakened capital market access and its likely
considerable external financing needs in the next few years, it is our
view that Portugal will likely access the EFSF and, thereafter, the
ESM,” the agency said.
S&P had warned last week that a further cut was possible depending
on the outcome of the EU summit.
The downgrade did nothing to dent the euro (EURUSD 1.4082, +0.0004,
+0.0284%) , which rose from a session low to trade at $1.4084
versus the dollar, little changed from Monday.
Portugal’s borrowing costs have soared in recent weeks to levels viewed
as unsustainable, underlining expectations the country will be forced
to follow fellow euro-zone members Greece and Ireland in seeking an
international rescue package. The yield on 10-year Portuguese bonds
moved above 8% after the downgrade, according to Dow Jones Newswires.
Greece faces more than 4 billion euros in bond redemptions in April and
another heavy round of redemptions in June.
Socrates, who has remained in office in a caretaker capacity, last week
denied that Lisbon would be forced to seek assistance, saying the
country could meet its financing needs.
Portugal cut its budget deficit to 7.3% of gross domestic product in
2010 from more than 9% in 2011. The rejected austerity measures were
part of the government’s plan to cut the deficit to 4.6% of GDP this
year and 3%, the EU limit, in 2012.
The opposition has said it will stick to the government’s
deficit-reduction targets. An election is seen as likely this summer.
S&P said Portugal’s public-sector debt trajectory could start to
decline in 2013, which means the country may be able to obtain ESM
funding without being required to restructure its debt. But the issue
of “subordination” remains, the agency said.
The agency said Portugal’s ratings outlook was negative but removed the
country from “credit watch.” The negative outlook reflects concerns the
economic environment could weaken more than expected and that a
political impasse could undermine the implementation of the country’s
deficit-reduction strategy.
S&P also cut Greece’s credit rating, which was already in junk
territory, to BB- from BB+, also citing ESM concerns. S&P said it
was keeping the rating on “credit watch negative,” reflecting fears of
a higher-than-expected deficit in 2010 and further deterioration in
public finances this year.
Fitch cuts Portugal ratings on
PM resignation
YAHOO
By Walter Brandimarte
24 March 2011
NEW YORK (Reuters) – Fitch on Thursday cut Portugal's credit ratings by
two notches, saying risks to the country's financing rose after
parliament failed to pass fiscal austerity measures and the prime
minister resigned.
The ratings agency warned further downgrades are likely in the next
three to six months, especially in the absence of a "timely and
credible" program of financial support from the International Monetary
Fund and European Union.
So far Portugal has managed to finance itself in capital markets, but
government borrowing costs spiked on Thursday -- with 10-year yields
reaching an all-time high of 7.9 percent.
That makes it challenging for the government to refinance upcoming bond
redemptions of 4.3 billion euros and 4.9 billion euros in April and
June, respectively. Chances Portugal will seek a bailout have
increased, according to Fitch.
"Given the lack of improvement in financing conditions, Fitch no longer
assumes Portugal can maintain affordable market access this year under
its baseline scenario," Fitch's analyst Douglas Renwick said in a
statement.
The agency cut Portugal's long-term foreign- and local-currency issuer
ratings to A-minus from A-plus. Short-term issuer ratings were cut to
F2 from F1. All the new notes were placed on "rating watch negative."
Portugal's country ceiling was affirmed at AAA.
Prime Minister Jose Socrates quit on Wednesday after parliament
rejected new austerity measures designed for Portugal to avoid seeking
IMF/EU financial assistance, as euro members Greece and Ireland did
last year.
Despite stepping down, Socrates on Thursday attended a two-day
euro-zone summit in Brussels, where he remained adamantly opposed to
requesting aid. He intends to hold that line at least until a new
Portuguese government is formed, probably in about two months.
The likelihood Portugal will require multilateral financial support in
the short term has risen significantly, given "its impaired ability to
retain affordable market access", Fitch said.
With its move, Fitch caught up with Moody's, which last week cut
Portugal's ratings two notches to A3, equivalent to Fitch's A-minus.
"They are only catching up with other rating agencies, and with all
ratings still being investment grade I don't think there'll be much
impact in the bond market," said Filipe Garcia, head of Informacao de
Mercados Financeiros consultants in Porto.
"But the timing looks strange and their focus on the political issues
seems a bit of an exaggeration and premature. The key context is the
European summit, which apparently is dominated by the Portuguese
crisis, so they at least could have waited for the summit to end,"
Garcia added.
Among the big three rating agencies, Standard & Poor's currently
assigns the highest rating to Portugal -- A-minus -- but the agency has
already said it is considering downgrading the country if growth
prospects weaken or if private creditors become subordinated to public
creditors in a possible financial aid program.
Further rating downgrades from Moody's are also likely, as the agency
said last week Portugal would need to meet the stricter fiscal targets
set by the government for 2011 in order to keep its rating.
Portugal
in crisis, unlikely to seek bailout at summit
YAHOO
By Axel Bugge and Luke Baker
Thu Mar 24, 5:32 am ET
LISBON/BRUSSELS (Reuters) – The resignation of Portugal's prime
minister will dominate a summit of EU leaders on the European economy
on Thursday and Friday, with pressure intense on Lisbon to seek a
bailout package.
Prime Minister Jose Socrates resigned on Wednesday after parliament
rejected his government's latest austerity measures aimed at avoiding
EU financial assistance. But he said he would still attend the two-day
summit in a caretaker capacity. Socrates remains adamantly
opposed to requesting EU/IMF aid and has made it clear he intends to
hold that line, at least until a new Portuguese government is formed in
the weeks ahead. That leaves Portugal in limbo, but the
likelihood remains that a bailout will have to be taken in the end.
Asked if Socrates would ask for aid at the summit, a senior EU official
said: "I would be surprised. There is a doubt on whether he has any
mandate right now to do so ... But I would not rule out."
Lisbon needs to refinance 4.5 billion euros of sovereign debt in April,
which may prove a trigger for finally making the request for aid.
One problem complicating Portugal's situation is that any bailout
request would have to be approved by parliament and the majority is
opposed to asking for help.
"I have always warned of the profoundly negative consequences of
seeking foreign aid," Socrates said as he resigned, vowing to continue
to do everything to avoid it.
If aid were to be requested -- and EU officials have made clear they
stand ready to provide one -- it is estimated that Lisbon would need
60-80 billion euros. Portuguese benchmark 10-year bond yields
rose further on Thursday, climbing to 7.90 percent, far above the 7.0
percent that is regarded as long-term sustainable. The euro
weakened to $1.4070 from $1.4117.
China, which has offered to buy Portuguese government debt in the past,
said it saw continued risks from the euro zone debt crisis but added
that it had increased its holdings of European government bonds to help
the region.
SUMMIT PROBLEMS
The summit, which was originally expected to sign off on a
"comprehensive package" of measures that EU leaders thought would help
resolve their year-long debt problems, is now not expected to take any
firm decisions on central issues.
"We think that no agreement at the EU summit on the bailout facilities
should erode euro support further in the near term," said Valentin
Marinov, currency analyst at CitiFX.
Draft conclusions drawn up ahead of the summit showed that a decision
on how to increase the effective lending capacity of the current
bailout fund, the European Financial Stability Facility, would not now
be taken until mid-year, probably ahead of a summit in late June.
While a technical issue -- it centers on whether euro zone member
states will provide capital or guarantees to raise the effective
capacity of the EFSF from 250 billion euros to the full 440 billion --
it risks further undermining market confidence in EU policymakers'
ability to resolve the crisis.
Finland is one of the main obstacles to a decision, since it has
dissolved parliament ahead of elections on April 17 and cannot
therefore sign off on a deal. Helsinki opposes using more guarantees to
increase the effective size of the EFSF.
A new Finnish government is only likely to be formed by May at the
earliest, and that government may include the euroskeptic True Finns
party, which opposes some of the EU's proposed crisis steps, further
complicating the outlook.
Over the last few months, EU leaders have made considerable progress in
putting together the crisis package. They have decided in
principle to expand the EFSF, agreed to create a permanent crisis fund
-- the European Stability Mechanism -- to replace the EFSF from 2013,
and agreed to strengthen economic coordination and increase
productivity.
But as well as being unable to agree on exactly how the EFSF's capacity
should be increased, there are doubts about how they will finance the
500 billion euro ESM using paid-in capital, callable capital and
guarantees.
A German official said on Wednesday that Berlin now wanted this week's
summit to alter a timetable agreed by EU finance ministers on Monday
for injecting cash into the ESM. While this is another
nitty-gritty issue, it contributes to a sense in financial markets that
EU member states are endlessly at odds over how best to handle the debt
crisis, and that everything could yet unravel.
NO MOVE ON IRELAND
The summit is also unlikely to make progress on reducing the interest
rate on bailout loans extended to Ireland. Dublin says the rate
is so high that it cripples the Irish economy, but agreement on cutting
it has been held up by Dublin's refusal to give in to German and French
pressure for Ireland to raise its low corporate tax rate.
"There is almost certainly not going to be a resolution of the Irish
issues tomorrow or Friday," an EU diplomat said on Wednesday.
"The feeling is that the outstanding issues for Ireland, which are not
just the interest rate but the banking question, that they are better
dealt with as a package."
Dublin and the EU are only expected to start detailed talks on how to
rescue the Irish banking system after the central bank publishes its
assessment of Irish commercial banks on March 31.
Germany
and France want Portugal to accept aid: report
YAHOO
8 January 2011
BERLIN (Reuters) – Germany and France want Portugal to accept an
international bailout as soon as possible in order to prevent its debt
crisis spreading to other countries, German magazine Der Spiegel
reported on Saturday.
Without citing its sources, the magazine said government experts from
both European heavyweights were concerned Lisbon will soon not be able
to finance its debt at reasonable rates, after its borrowing costs rose
at the end of last year.
Berlin and Paris also want euro zone countries to publicly commit to do
whatever it takes to protect the bloc's single currency, including
topping up a 750 billion euro ($968 billion) rescue fund if necessary.
Portugal is viewed by many economists as the peripheral euro zone
country that is most likely to follow Ireland and Greece to seek an
international bailout as it grapples to cut its debts and borrowing
costs. It holds its first bond auction of the year next week.
Portugal Gives Itself a Clean-Energy
Makeover
NYTIMES
By ELISABETH ROSENTHAL
August 9, 2010
LISBON — Five years ago, the leaders of this sun-scorched, wind-swept
nation made a bet: To reduce Portugal’s dependence on imported fossil
fuels, they embarked on an array of ambitious renewable energy projects
— primarily harnessing the country’s wind and hydropower, but also its
sunlight and ocean waves.
Today, Lisbon’s trendy bars, Porto’s factories and the Algarve’s
glamorous resorts are powered substantially by clean energy. Nearly 45
percent of the electricity in Portugal’s grid will come from renewable
sources this year, up from 17 percent just five years ago.
Land-based wind power — this year deemed “potentially competitive” with
fossil fuels by the International Energy Agency in Paris — has expanded
sevenfold in that time. And Portugal expects in 2011 to become the
first country to inaugurate a national network of charging stations for
electric cars.
“I’ve seen all the smiles — you know: It’s a good dream. It can’t
compete. It’s too expensive,” said Prime Minister José
Sócrates, recalling the way Silvio Berlusconi, the Italian prime
minister, mockingly offered to build him an electric Ferrari. Mr.
Sócrates added, “The experience of Portugal shows that it is
possible to make these changes in a very short time.”
The oil spill in the Gulf of Mexico has renewed questions about the
risks and unpredictable costs of America’s unremitting dependence on
fossil fuels. President Obama has seized on the opportunity to promote
his goal of having 20 to 25 percent of America’s electricity produced
from renewable sources by 2025.
While Portugal’s experience shows that rapid progress is achievable, it
also highlights the price of such a transition. Portuguese households
have long paid about twice what Americans pay for electricity, and
prices have risen 15 percent in the last five years, probably partly
because of the renewable energy program, the International Energy
Agency says.
Although a 2009 report by the agency called Portugal’s renewable energy
transition a “remarkable success,” it added, “It is not fully clear
that their costs, both financial and economic, as well as their impact
on final consumer energy prices, are well understood and appreciated.”
Indeed, complaints about rising electricity rates are a mainstay of
pensioners’ gossip here. Mr. Sócrates, who after a landslide
victory in 2005 pushed through the major elements of the energy
makeover over the objections of the country’s fossil fuel industry,
survived last year’s election only as the leader of a weak coalition.
“You cannot imagine the pressure we suffered that first year,” said
Manuel Pinho, Portugal’s minister of economy and innovation from 2005
until last year, who largely masterminded the transition, adding,
“Politicians must take tough decisions.”
Still, aggressive national policies to accelerate renewable energy use
are succeeding in Portugal and some other countries, according to a
recent report by IHS Emerging Energy Research of Cambridge, Mass., a
leading energy consulting firm. By 2025, the report projected, Ireland,
Denmark and Britain will also get 40 percent or more of their
electricity from renewable sources; if power from large-scale
hydroelectric dams, an older type of renewable energy, is included,
countries like Canada and Brazil join the list.
The United States, which last year generated less than 5 percent of its
power from newer forms of renewable energy, will lag behind at 16
percent (or just over 20 percent, including hydroelectric power),
according to IHS.
To force Portugal’s energy transition, Mr. Sócrates’s government
restructured and privatized former state energy utilities to create a
grid better suited to renewable power sources. To lure private
companies into Portugal’s new market, the government gave them
contracts locking in a stable price for 15 years — a subsidy that
varied by technology and was initially high but decreased with each new
contract round.
Compared with the United States, European countries have powerful
incentives to pursue renewable energy. Many, like Portugal, have little
fossil fuel of their own, and the European Union’s emissions trading
system discourages fossil fuel use by requiring industry to essentially
pay for excessive carbon dioxide emissions.
Portugal was well poised to be a guinea pig because it has large
untapped resources of wind and river power, the two most cost-effective
renewable sources. Government officials say the energy transformation
required no increase in taxes or public debt, precisely because the new
sources of electricity, which require no fuel and produce no emissions,
replaced electricity previously produced by buying and burning imported
natural gas, coal and oil. By 2014 the renewable energy program will
allow Portugal to fully close at least two conventional power plants
and reduce the operation of others.
“So far the program has placed no stress on the national budget” and
has not created government debt, said Shinji Fujino, head of the
International Energy Agency’s country study division.
If the United States is to catch up to countries like Portugal, energy
experts say, it must overcome obstacles like a fragmented, outdated
energy grid poorly suited to renewable energy; a historic reliance on
plentiful and cheap supplies of fossil fuels, especially coal; powerful
oil and coal industries that often oppose incentives for renewable
development; and energy policy that is heavily influenced by individual
states.
The relative costs of an energy transition would inevitably be higher
in the United States than in Portugal. But as the expense of renewable
power drops, an increasing number of countries see such a shift as
worthwhile, said Alex Klein, research director, clean and renewable
power generation, at IHS.
“The cost gap will close in the next decade, but what you get right
away is an energy supply that is domestically controlled and safer,”
Mr. Klein said.
Necessity Drives Change
Portugal’s venture was driven by necessity. With a rising standard of
living and no fossil fuel of its own, the cost of energy imports —
principally oil and gas — doubled in the last decade, accounting for 50
percent of the country’s trade deficit, and was highly volatile. The
oil went to fuel cars, the gas mainly to electricity. Unlike the United
States, Portugal never depended heavily on coal for electricity
generation because close and reliable sources of natural gas were
available in North Africa, and Europe’s carbon trading system could
make coal costly.
Portugal is now on track to reach its goal of using domestically
produced renewable energy, including large-scale hydropower, for 60
percent of its electricity and 31 percent of its total energy needs by
2020. (Total energy needs include purposes other than generating
electricity, like heating homes and powering cars.)
In making the shift, Portugal has overcome longstanding concerns about
reliability and high cost. The lights go on in Lisbon even when the
wind dies down at the vast two-year-old Alto Minho wind farm. The
country’s electricity production costs and consumer electricity rates —
including the premium prices paid for power from renewable sources —
are about average for Europe, but still higher than those in China or
the United States, countries that rely on cheap coal.
Portugal says it has kept costs down by focusing heavily on the
cheapest forms of renewable energy — wind and hydropower — and
ratcheting down the premium prices it pays to lure companies to build
new plants.
While the government estimates that the total investment in revamping
Portugal’s energy structure will be about 16.3 billion euros, or $22
billion, that cost is borne by the private companies that operate the
grid and the renewable plants and is reflected in consumers’
electricity rates. The companies’ payback comes from the 15 years of
guaranteed wholesale electricity rates promised by the government. Once
the new infrastructure is completed, Mr. Pinho said, the system will
cost about 1.7 billion euros ($2.3 billion) a year less to run than it
formerly did, primarily by avoiding natural gas imports.
A smaller savings will come from carbon credits Portugal can sell under
the European Union’s carbon trading system: countries and industries
that produce fewer emissions than allotted can sell permits to those
that exceed their limits.
Mr. Fujino of the International Energy Agency said Portugal’s
calculations might be optimistic. But he noted that the country’s
transition had also created a valuable new industry: Last year, for the
first time, it became a net power exporter, sending a small amount of
electricity to Spain. Tens of thousands of Portuguese work in the
field. Energias de Portugal, the country’s largest energy company, owns
wind farms in Iowa and Texas, through its American subsidiary, Horizon
Wind Energy.
Redesigning the System
A nationwide supply of renewable power requires a grid that can move
electricity from windy, sunny places to the cities.
But a decade ago in Portugal, as in many places in the United States
today, power companies owned not only power generating plants, but also
transmission lines. Those companies have little incentive to welcome
new sources of renewable energy, which compete with their investment in
fossil fuels. So in 2000, Portugal’s first step was to separate making
electricity from transporting it, through a mandatory purchase by the
government of all transmission lines for electricity and gas at what
were deemed fair market prices.
Those lines were then used to create the skeleton of what since 2007
has been a regulated and publicly traded company that operates the
national electricity and natural gas networks.
Next, the government auctioned off contracts to private companies to
build and operate wind and hydropower plants. Bidders were granted
rights based on the government-guaranteed price they would accept for
the energy they produced, as well as on their willingness to invest in
Portugal’s renewable economy, including jobs and other venture capital
funds. Some of the winners were foreign companies. In the latest round
of bidding, the price guaranteed for wind energy was in the range of
the price paid for electricity generated by natural gas.
Such a drastic reorganization might be extremely difficult in the
United States, where power companies have strong political sway and
states decide whether to promote renewable energy. Colorado recently
legislated that 30 percent of its energy must come from renewable
sources by 2020, but neighboring Utah has only weak voluntary goals.
Coal states, like Kentucky and West Virginia, have relatively few
policies to encourage alternative energies.
In Portugal, said Mr. Pinho, the former economy minister, who will join
Columbia University’s faculty, “the prime minister had an absolute
majority.”
“He was very strong, and everyone knew we would not step back,” Mr.
Pinho said.
A Flexible Network
Running a country using electricity derived from nature’s highly
unpredictable forces requires new technology and the juggling skills of
a plate spinner. A wind farm that produces 200 megawatts one hour may
produce only 5 megawatts a few hours later; the sun shines
intermittently in many places; hydropower is plentiful in the rainy
winter, but may be limited in summer.
Portugal’s national energy transmission company, Redes
Energéticas Nacionais or R.E.N., uses sophisticated modeling to
predict weather, especially wind patterns, and computer programs to
calculate energy from the various renewable-energy plants. Since the
country’s energy transition, the network has doubled the number of
dispatchers who route energy to where it is needed.
“You need a lot of new skills. It’s a real-time operation, and there
are far more decisions to be made — every hour, every second,” said
Victor Baptista, director general of R.E.N. “The objective is to keep
the system alive and avoid blackouts.”
Like some American states, Portugal has for decades generated
electricity from hydropower plants on its raging rivers. But new
programs combine wind and water: Wind-driven turbines pump water uphill
at night, the most blustery period; then the water flows downhill by
day, generating electricity, when consumer demand is highest.
Denmark, another country that relies heavily on wind power, frequently
imports electricity from its energy-rich neighbor Norway when the wind
dies down; by comparison, Portugal’s grid is relatively isolated,
although R.E.N. has greatly increased its connection with Spain to
allow for energy sharing.
Portugal’s distribution system is also now a two-way street. Instead of
just delivering electricity, it draws electricity from even the
smallest generators, like rooftop solar panels. The government
aggressively encourages such contributions by setting a premium price
for those who buy rooftop-generated solar electricity. “To make this
kind of system work, you have to make a lot of different kinds of deals
at the same time,” said Carlos Zorrinho, the secretary of state for
energy and innovation.
To ensure a stable power base when the forces of nature shut down, the
system needs to maintain a base of fossil fuel that can be fired up at
will. Although Portugal’s traditional power plants now operate many
fewer hours than before, the country is also building some highly
efficient natural gas plants.
To accommodate all this, Portugal needed new transmission lines from
remote windy regions to urban centers. Portugal began modernizing its
grid a decade ago. Accommodating a greater share of renewable power
cost an additional 480 million euros, or about $637 million, an expense
folded into electricity rates, according to R.E.N.
Last year, President Obama offered billions of dollars in grants to
modernize the grid in the United States, but it is not clear that such
a piecemeal effort will be adequate for renewable power. Widely diverse
permitting procedures in different states and the fact that many
private companies control local fragments of the grid make it hard to
move power over long distances, for example, from windy Iowa to users
in Atlanta. The American Society of Civil Engineers gave the United
States’ grid a “D+,” commenting that it is “in urgent need of
modernization.”
“A real smart national grid would radically change our technology
profile,” said John Juech, vice president for policy analysis at Garten
Rothkopf, a Washington consulting firm that focuses on energy. “But it
will be very costly, and the political will may not be there.”
A 2009 report commissioned by the Pew Center on Global Climate Change
estimated that the United States would have to spend $3 billion to $4
billion a year for the next two decades to create a grid that could
accommodate deriving 20 percent of electricity from wind power by 2030
— a 40 percent to 50 percent increase over current spending.
The Drawbacks
Energy experts consider Portugal’s experiment a success. But there have
been losers. Many environmentalists object to the government plans to
double the amount of wind energy, saying lights and noise from turbines
will interfere with birds’ behavior. Conservation groups worry that new
dams will destroy Portugal’s cork-oak habitats.
Local companies complain that the government allowed large
multinationals to displace them.
Until it became the site of the largest wind farm south of Lisbon,
Barão de São João was a sleepy village on the
blustery Alentejo Coast, home to farmers who tilled its roller coaster
hills and holiday homeowners drawn to cheap land and idyllic views.
Renewable energy has brought conflict.
“I know it’s good for the country because it’s clean energy and it’s
good for the landowners who got money, but it hasn’t brought me any
good,” said José Cristino, 48, a burly farmer harvesting grain
with a wind turbine’s thrap-thrap-thrap in the background. “I look at
these things day and night.” He said 90 percent of the town’s
population had been opposed.
In Portugal, as in the United States, politicians have sold green
energy programs to communities with promises of job creation. Locally,
the effect has often proved limited. For example, more than five years
ago, the isolated city of Moura became the site of Portugal’s largest
solar plant because it “gets the most sun of anywhere in Europe and has
lots of useless space,” said José Maria Prazeres
Pós-de-Mina, the mayor.
But while 400 people built the Moura plant, only 20 to 25 work there
now, since gathering sunlight requires little human labor. Unemployment
remains at 15 percent, the mayor said — though researchers, engineers
and foreign delegations frequently visit the town’s new solar research
center.
Indeed, Portugal’s engineers and companies are now global players.
Portugal’s EDP Renováveis, first listed on stock exchanges in
2008, is the third largest company in the world in wind-generated
electricity output. This year, its Portuguese chief executive, Ana
Maria Fernandes, signed contracts to sell electricity from its wind
farm in Iowa to the Tennessee Valley Authority.
“Broadly, Europe has had great success in this area,” said Mr. Juech,
the analyst at Garten Rothkopf. “But that is the result of huge
government support and intervention, and that raises questions about
what happens when you have an economic crisis or political change; will
these technologies still be sustainable?”
Board
of Selectmen, November 15, 2007
After attending the "Oath of Office" ceremony, Trancoso's Mayor
joins the Board at the Selectmen's meeting November 15, 2007.
Mayor Julio Jose Saraiva Sarmento sat in with the new Board of
Selectmen for the entire meeting. Picture story below.
In front of the West Point
doors...
Weston citizen, then Mayor Sarmento with Trancoso delegation, witness
the "Oath of
Office" ceremony prior to
the first meeting of the new Board of Selectmen (2007-2009).
A small token
First Selectman Woody Bliss presented a small token of esteem to Mayor
Sarmento...
Tax Relief and Deferment
One item on the agenda was a recommendation for changes to the tax
relief for the elderly program for fiscal 2009;
Veterans' Affairs
Another item was how the Veterans' Relief program fit in with the
re-evaluation on-going, and whether both programs (tax relief for the
elderly and veterans) should go to public hearing at once;
Trancoso visitors in addition to Mayor Sarmento seen in this photo.