Climate change is an inescapable and growing threat to biodiversity and ecosystems; it not only affects individual species and their interaction with other organisms, but also their habitats. These changes alter the function and structure of ecosystems and the goods and services that natural systems provide to society. It is essential to understand the direction of ecological events to allow human communities to better respond to these changes and adapt as necessary [1]. Developed countries, which are historically responsible for the most significant proportions of carbon emissions, have the great responsibility to act first and most. It is expected that their consumption will decrease due to increased efficiency (without decreasing comfort). However, developing countries will rightfully want to increase their energy consumption in order to have better living conditions. The decrease in consumption in developed countries will not compensate for the increase in developing countries, so the overall energy demand will continue to increase [2].

Not only will the primary energy demand increase, but also the final energy consumption and the share of electricity in it, as can be seen in the report by [2]. Supposing that this is the case, in the future, energy production will be forced to increase. In that case, renewable energy technologies might be the only chance to make this increase sustainable. They are not only beneficial for the environment because they do not use fossil fuels, which means they do not emit Greenhouse Gases (GHG), but they are also economically viable by stimulating employment and economic growth; these technologies will then help the world move towards a low-carbon economy [3].

In 2015, world leaders formulated Agenda 2030, a set of seventeen objectives geared towards sustainable development and, in particular, actions to fight climate change. [4].

Europe is determined to achieve carbon neutrality by 2050, which entails the reduction of GHG net emissions to zero. This does not mean that the emissions will be zero; this means that emissions will be off-set, whether it is by planting trees, applying techniques in the ocean, or by using CO₂ capture technologies. The European climate goal for 2030 was to decrease emissions by 40% as compared to 1991; however, in September 2020, the European Commission presented the new European Green Deal—Stepping up Europe’s 2030 climate ambition [5] to the European Parliament. This document established two new main objectives: (1) to make the GHG emission reduction target for 2030 even lower—to at least 55%—and (2) to fundamentally change climate and energy legislation in order to achieve these goals.

Public Policies Supporting Renewables (PPSR) are then implemented to achieve these commitments; in fact, in the literature, PPSR are also known as “market-opening policies” or “market-driven policies” [6].

This paper reviews the different public policies used to hold up PV installations connected to the electrical grid. In the past, public policies were deployed to support the widespread use of photovoltaic (PV) power, as was the case of feed-in tariffs (FiT), feed-in premiums, green certificates, electricity compensation, direct capital subsidies, and tax credits. These policies played an important role and are reviewed and historically contextualized in this paper. With the increasing cost competitiveness of PV technology and with the transition from conventional power systems to modern smart grids, new policies were needed to promote the integration of more PV power into the smart grids. Moreover, these policies were also aimed at renewing the interest in microgrids as a way to increase energy self-sufficiency and decarbonization.

Converting conventional grids into smart grids (SG) involves the incorporation of communication mechanisms that allow consumers to play an active role in managing their own consumption through the use of demand-side management (DSM)—also known as demand response (DR) methods. In this way, they can manage to reduce their consumption and, in turn, their electricity bill. Combining this vision of the future with renewable energy sources is what is needed for a sustainable future [7]. This was accomplished by Sibo Nan et al. in [8], in which a DR schedule model was developed, with the goal of alleviating the pressure of the grid during peak hours, but also decreasing consumers’ costs without decreasing their comfort. From this case study, multiple schedule solutions that would contribute to the elimination of these problems were found. Another example is shown in [9], in which the authors developed a more efficient and improved communication infrastructure that was SG-based and used cognitive radio technology. It included an approach based on game algorithm in DSM, which helped to select the appropriate storage size for each user. Results showed a decrease in the total cost of the system as well as a decrease in the electricity bill and a decrease in the peak-to-average ratio.

SG also have different characteristics from conventional grids; one example is their high reliability. An SG can detect errors and resolve them, acting as a self-healing mechanism [10]. Moreover, this high reliability is only achievable with continuous monitoring and advanced control systems that enable the optimal management of the power flow [11]. One barrier in SG implementation is security, as a grid with a high level of automation is more susceptible to cyber-attacks; thus, there are several organizations working to improve and develop regulations for the SG [12,13].

Electric vehicles are another method of strengthening the grid, so long as its integration is carefully planned. A Portuguese study showed that a higher number of electric vehicles charging lead to a reduction of the surplus energy in a house with a PV system. A good correspondence between EV smart charging and PV production suggests that the charging of electric vehicles should take place during the day [14].

Nowadays, solar PV public policies are no longer intended to support this technology; given that these are already economically viable, they are now considered to be the cheapest way of producing electricity. Therefore, the public policies that are currently in effect are supposed to help to expand the capacity installed and the number of solar PVs connected to the smart grids. Furthermore, they are meant to promote the development of microgrids that can operate independently or are connected to the main grid. These incentives can happen through Energy Communities, Local Markets, or Solar Auctions. This last one will be mainly explored in the following chapter.

An energy community is a set of consumers that, through a shared installation (close to the participants), produce part—or even the totality—of the consumed electric energy [54]. An advantage of this system is that even with the impossibility of having an individual facility, this method allows the participants to join a renewable project with equal access and to pay a lower value for their electricity [54].

The working mechanism is as follows. The electricity produced is injected into the grid, the participants consume directly from the grid, and then each one’s energy consumption is adjusted according to the production of the power plant and their respective share. This share is related to the consumption or investment of each participant [54].

The consumer receives two bills, one from the trader, which has the total consumption minus the consumption of the solar community, and another from the solar community, which is related to the facility’s operating costs.

Not only does the consumer have a more considerable energetic independence given the fact that they rely on two sources of production, but they also contribute to the local economy, help in the creation of new jobs, and generate savings. Consumers outside these communities do not know if the electricity they are using in their houses is coming from renewable sources or not; however, inside the community, all the participants are sure that the electricity originates from solar technology.

In the actual European Regulatory framework, there are two approaches related to energy communities that are seen as legally recognized entities [55]:

• Renewable Energy Community (REC) under the EU Directive 2018/2001 promoting the renewable energy sources is defined in the 2nd article of the EU “RED II” directive and regulated in article 22 [56].
• Citizens Community for Energy (CCE) under the EU Directive UE 2019/944 for the Internal Electricity Market is defined in the 2nd article and regulated in article 16 [57].

In Table 2, it is possible to see the differentiating aspects of each approach:

Additionally, it is expected that renewable energy communities will boost the interest in developing microgrids that can be self-sufficient and promote electricity access, clean energy, and technological development. REC, working together with batteries and electric vehicles—vehicle-to-grid (V2G) feature—may participate in demand response programs to help with the management of microgrids [59].

A local market is a place where individual consumers and producer consumers interact to negotiate electricity in a specific neighborhood [60]. This scenario was studied in a pilot project called “Dominoes”, a European research project supported by Horizon 2020 and which joined several European partners [61].

The Dominoes project started in October of 2017 and had a budget of USD 4 million. It aims to discover and help to develop new responses to demand, aggregation, network management, and peer-to-peer (p2p) commercial services through the design, development, and validation of an expandable solution for the local energy market [61].

The project was tested in two countries and three environments. One of them was in Portugal, more precisely in Évora, and another was virtualized through a Virtual Power Plant (VPP) solution, which used a large number of consumption points all over the country. The third was in Lappeenranta, Finland [62].

According to E-Redes, the Portuguese Distribution System Operator (DSO) and a partner of the project, this study concluded that it was possible to save 7% on the average energy bill by implementing the solutions studied in the project [62].

Promoting local markets is expected to raise interest in developing microgrids to create a good environment for local energy trading.

Solar auctions are reverse auctions in which the producers compete for long-term power purchase agreements (PPA) [63]. This situation offers a lot of opportunities to governments, namely the ability to plan PV capacity and energy volumes, minimize investments risks for the developers (this is accomplished, for example, by assuring revenues for a certain period) as well as reflect their policy priorities (for example, deciding to promote manufacturing industries with local requirements in bid criteria).

The auction procedure usually has three steps. In the first step, governments or utilities allow the participants to propose the specific capacity or generation that they intend to acquire through the auction process. There are two types of auctions: “technology-specific”—if all the projects are solar projects, or “technology-neutral”—when solar projects compete with other types of projects. At this step, with the objective of reducing the risk of projects that might not have the means to be developed, governments try to eliminate speculative bidders. In the second step, the project developers must present the bids that correspond to the electricity price they are willing to receive along with the PPA. Governments decide who the winners are based on the price or on other parameters, such as the generation of local employment. The winners sign PPAs with the off taker in the third and last step of the auction procedure. Governments then ensure the delivery of projects through the scheduled commissioning date and impose penalties for non-performance based on compliance rules [63].

Table 3 sums up the past and present policies:

Regarding the promoting policies, they can work together to reach a common goal—increasing solar PV installed capacity. Energy communities can be implemented at the same time as when solar auctions occur. Because solar auctions are reverse auctions, they present an opportunity for lowering the cost of electricity to be paid by the consumers, and in particular those who do not have the possibility to form an energy community due to space restrictions. Solar auctions also mobilize much more capacity than the other two mechanisms.

In the following section, the process of solar auctions that occurred in Portugal in 2019 and 2020 is going to be explained.

3. Solar Auctions in Portugal

For this auction to be launched, its adaptation to the legal regime was necessary, and so the Decree-Law 76/2019 was published [64,65]. The authority for this auction is the Portuguese State, more specifically the General Directorate of Energy and Geology, which directs the entire procedure. In this auction, there were 24 lots of solar energy proposed, which corresponds to a total power of 1400 MW. It is worth noting that at the end of 2019, the total installed capacity of PV technology was around 830 MW.

It was also possible to choose between two different remuneration regimes: the guaranteed remuneration regime and the general remuneration regime. In the first case, the goal was that the investors would offer the lowest tariff possible that benefit the consumers; in this regime, the producers sell the electricity produced to the Last Resort Retailer at a guaranteed price within a certain period. In the second case, the objective was for the electrical system to ensure the highest contribution. Here, the producers sell the electricity produced at market price; in this case, the promoter is subjected to market rules. However, they receive guarantees of origin/green certificates [66].

An important factor when analyzing auctions is the competitiveness of the prices, and this can be achieved by comparing arithmetic and weighted averages. Considering the guaranteed remuneration regime, the arithmetic and weighted averages of foreign companies are 22.68 EUR/MWh and 20.16 EUR/MWh, respectively; on the other hand, the arithmetic and weighted averages of national companies are 23.62 EUR/MWh and 21.20 EUR/MWh, respectively. The difference between both averages is minimal, indicating that the lots with higher capacity do not reveal a significant factor. There is a difference, however, when comparing both averages in the general remuneration regime. The arithmetic average has a value of 15.47 EUR/MWh and the weighted average of 21.35 EUR/MWh; this is because lot 2 and 13 have shallow values when compared with the others.

The main difference between the two auctions is that in this one, there is the possibility of having a new remuneration regime for systems with storage. Moreover, in this auction, the bids were all located in Alentejo and Algarve (Southern of Portugal), contrary to the previous auction [67].

There were 12 lots of solar energy proposed in this auction, which corresponds to a total power of 700 MW; however, only 670 MW were awarded [68]. It was also possible to choose from three different remuneration regimes (it is recalled that in the 2019 auction, there were only two regimes): (1) variable premium for differences; (2) fixed compensation for the public grid; and (3) fixed flexibility award, this last one specifically being for systems with storage [69].

The participants in the first model have the right to a variable premium, positive or negative, depending on the daily market closing price. If the market price is higher than the producer price, then there is a right to receive that difference; if the market price is below the producer price, then there is an obligation to pay that difference.

In the second model, the winners of the lots are obliged to pay an annual contribution to the public electrical grid. On the other hand, the bidders are free to independently sell their electricity by whatever mechanism they prefer, including on the market.

In the new model, the winners (only systems with storage) have the right to receive a fixed annual premium. However, when the wholesale price goes above a strike price, there is an obligation to pay that price difference. This is, in fact, a very innovative strategy that indirectly “obligates” the producer to use the maximum capacity of the battery. The more capacity used, the more energy sold at the market price, and therefore the more revenue the producer will have. This might justify why this regime awarded 75% of the total capacity auctioned.

Figure 3 shows the evolution of the installed capacity of both technologies. The evolution of wind capacity is similar to a log curve; however, the solar curve is comparable to an exponential curve. This exponential increase in solar technology resulted from the implementation of support policies.

We can see in Figure 3 that the solar PV is on an upward trajectory, and this is expected to continue in the future. Figure 4 shows Portugal’s forecast of solar PV capacity until 2030.

Portugal is investing heavily in solar energy; as can be seen in the figure, by the end of 2030, it is expected that more than 7.5 GW of solar PV capacity will have been installed. Solar auctions are perhaps the decisive factor in achieving these goals as they are the public policy with the most impact on solar promotion, given that it is the promoting policy capable of attracting more solar investment.

There are also the production units for self-consumption, which consist of RES systems with a maximum capacity of 1 MW and whose objective is to self-consume the produced energy, with the possibility to inject the surplus into the grid. Figure 5 shows how this activity is also growing in Portugal and contributing to the overall installed capacity.