Source - ERSE Parecer PDIRD-E 2024

ERSE — Parecer à proposta de PDIRD-E 2024 (Opinion on the proposed Distribution Network Development and Investment Plan 2024). Issued April 2025 by ERSE (Entidade Reguladora dos Serviços Energéticos — Portugal’s energy markets NRA). Document: formal regulatory opinion on E-Redes’ proposed PDIRD-E 2024 covering the quinquennium 2026–2030. Legal basis: Decreto-Lei 15/2022, Art. 129(7) (transposing Directive 2019/944). Language: Portuguese; all content in this wiki page is translated to English.

Metadata

• Author: ERSE (Entidade Reguladora dos Serviços Energéticos)
• Date: April 2025
• Document type: Formal regulatory opinion (Parecer)
• Subject: E-Redes PDIRD-E 2024 (Plano de Desenvolvimento e Investimento das Redes de Distribuição de Energia Elétrica — Distribution Network Development and Investment Plan)
• Planning period: 2026–2030 (5-year quinquennium)
• Raw file: Raw/parecer-à-proposta-de-pdird-e-2024.pdf → extracted to Raw/parecer-pdird-e-2024-extracted.txt

Context

PDIRD-E (Plano de Desenvolvimento e Investimento das Redes de Distribuição de Energia Elétrica — Distribution Network Development and Investment Plan for electricity) is Portugal’s equivalent of Sweden’s DNDP (nätutvecklingsplan). It is produced by E-Redes (Portugal’s sole distribution system operator, formerly EDP Distribuição) and reviewed by ERSE (equivalent to Sweden’s Ei), before final approval by the Minister responsible for energy via Council of Ministers resolution. The quinquennial plan is revised every 5 years with biennial updates.

E-Redes operates approximately 100% of Portugal’s distribution network. The DSO’s name was changed from EDP Distribuição to E-Redes in 2021.

ERSE is Portugal’s energy markets NRA. Unlike Sweden’s Ei (ex-post supervisory role only), ERSE issues a binding opinion that can require amendments to the PDIRD-E. ERSE also runs a mandatory 30-day public consultation (ERSE Public Consultation No. 126, November 2024–January 2025, 41 respondents) before issuing its opinion.

Regulatory process

Per Decreto-Lei 15/2022 Art. 129:

1. E-Redes submits PDIRD-E proposal to ERSE and DGEG by 15 October
2. ERSE runs a 30-day public consultation within 22 days
3. Within 22 days of consultation close: ERSE prepares public consultation report, shared with DGEG, TSO, and E-Redes
4. Within 30 days: ERSE issues its opinion (this document); DGEG and TSO issue separate opinions
5. Within 60 days: E-Redes prepares final PDIRD-E 2024 incorporating all opinions
6. DGEG forwards final plan to the Minister; approved by Council of Ministers resolution

PDIRD-E has the status of a sectoral programme (programa setorial) under Portuguese spatial planning law (Decreto-Lei 80/2015), requiring a Strategic Environmental Assessment.

Investment overview

Investment pillars:

• Modernisation (asset renewal and rehabilitation) — ~€121M/year average; largest single pillar, nearly 3× prior quinquennium
• Electrification and Decarbonisation
• Resilience and Environment
• Digital Transformation (automation, SCADA, cybersecurity — €15.5M for cybersecurity alone)
• Support

Investment categories:

• Mandatory investment (obligatory connections for new consumers/producers and metering): €169.6M
• Company-initiated investment (grid improvement and development): €1,068M (primary DNDP scope)

Execution challenges in prior period (2021–2023): global average execution aligned with plans, but only 19 individual projects transferred to operation (~4% of approved projects); ~50% of approved projects rescheduled due to permitting delays, materials scarcity, and land acquisition difficulties.

Key finding 1 — Flexibility and conventional investment (Section 5.2)

7 deferrable projects, €27M: E-Redes identified 7 specific investment projects (out of the ~€95M “Network Development” programme) that can potentially be deferred if local flexibility is contracted. The flexibility mechanism: contracting local generation and consumption flexibility to be activated on-demand for network overloads or temporary unavailabilities.

ERSE positively assesses this as a step forward but recommends E-Redes go significantly further:

• Identify a larger number of flexibility cases
• Use probabilistic scenario planning (both supply-side and demand-side) to identify additional deferrable investments
• Perform explicit cost-benefit analysis on all Network Development programme projects (~€95M), showing results of flexibility vs. conventional reinforcement comparison
• Include CBA results (or justification for absence) in each individual project sheet in the final PDIRD-E

ERSE’s framing: Flexibility solutions allow DSOs to manage power flows efficiently by actively managing the supply and demand of grid-connected assets (including standalone storage). Flexibility can delay non-urgent investments and optimise the use of existing capacity, improving overall efficiency.

Direction of travel: ERSE acknowledges this is moving in the right direction but considers it can be considerably more ambitious. The 2026 biennial update provides an opportunity to revise assumptions and incorporate new data.

Key finding 2 — Probabilistic planning methodology

E-Redes is beginning to use stochastic models and probabilistic planning approaches in PDIRD-E 2024, though at a “limited level.” ERSE positively assesses this and recommends E-Redes:

• Deepen probabilistic methodology, applying it to both demand and supply sides
• Use probabilistic capacity calculation to maximise available capacity
• Continue the trajectory already initiated

ERSE also recommends E-Redes report how much of its network will be operated under dynamic parameters each year (as an indicator for effective flexible capacity allocation).

Key finding 3 — Acesso com restrições (restricted / flexible access)

Equivalent of Swedish villkorade avtal. ERSE explicitly recommends E-Redes actively offer flexible/restricted access to the network (acesso com restrições) given the imbalance between renewable capacity needs and available firm capacity. Specifically:

• E-Redes must quantify and publish currently available distribution network capacity disaggregated by time (minimum: by season and by weekday/weekend type) — i.e., capacity that could be offered on a restricted basis, excluding upstream TSO constraints
• This time-disaggregated capacity represents the potential volume of restricted access E-Redes could offer without compromising system security
• Restrictions from the TSO (upstream network) can be overlaid on top of E-Redes’ own restrictions

Storage operators’ business case: ERSE frames standalone battery storage as either a problem (if requiring firm access for both injection and offtake) or a solution (if licensed with flexible access — enabling market arbitrage, ancillary services, and local DSO flexibility). Storage operators seeking connection should develop their business model around flexible access rather than waiting for firm access, choosing locations compatible with restricted capacity availability.

Congestion as opportunity: ERSE explicitly reframes network constraints not only as barriers to firm connection but as signals for potential flexibility procurement and for indicating where storage investment is most attractive.

FCA as complement, not substitute: ERSE is clear that flexible access is a complement to network investment, not a replacement. It should optimise the use of existing assets; it does not eliminate the need for continued grid development.

Key finding 4 — TOTEX regulation (Section 6.2)

Portugal introduced revenue cap on TOTEX (Total Expenditure = CAPEX + OPEX) for distribution network activity in the regulatory period beginning 2022 (covering both AT/MT and BT voltage levels).

Timeline of Portuguese regulatory evolution:

• Until 2011: price cap on TOTEX
• 2012–2017: price cap on OPEX only; CAPEX accepted annually (CAPEX bias regime)
• 2018–2021: revenue cap on TOTEX for BT only; CAPEX-by-year for AT/MT (partial reform)
• 2022 onwards: revenue cap on TOTEX for all voltage levels (AT/MT and BT)

Effect of TOTEX reform: Under the prior CAPEX-heavy model, each euro of investment directly increased the DSO’s allowed revenues — creating a structural bias toward network investment over operational alternatives (flexibility, OPEX-based solutions). Under the TOTEX revenue cap, investment no longer automatically drives up allowed revenues. The DSO can choose the least-cost mix of CAPEX and OPEX solutions without regulatory penalty. ERSE frames this as enabling “more efficient and flexible management.”

Tariff impact of PDIRD-E 2024 investments: ERSE estimates the investment programme adds approximately +10.8% to AT/MT distribution network unit revenues in 2026, with approximately +1%/year growth through 2030 (central scenario). This is relative to the TOTEX cost base, not a direct per-unit tariff figure.

CAPEX historically represented ~67% of AT/MT distribution revenues (before TOTEX reform). The TOTEX cap smooths this into an annualised equivalent payment.

Key finding 5 — Service quality

• SAIDI MT (medium-tension supply interruption duration index) in 2023: 61.8 minutes
• SAIDI MT target for 2031: 59.3 minutes (slight improvement)
• Consistent long-term improvement trend; Portugal benchmarks against other European countries with predominantly overhead-line grids

Key finding 6 — Demand forecast

Three scenarios (superior/central/inferior). ERSE notes the newer RMSA-E 2024 (February 2025) reduces all consumption forecasts vs RMSA-E 2023, affecting tariff impact calculations. E-Redes’ central scenario is comparable to the RMSA-E 2024 “superior ambition” scenario. Green hydrogen production excluded from distribution-level forecasts (assumed to be served entirely by the transmission network).

Key finding 7 — Grid planning future direction

ERSE’s vision for the future distribution network: an active platform for the energy transition, not a passive delivery system. Requirements:

• Absorb high levels of distributed renewable production (net metering, self-consumption)
• Handle dynamic and variable loads (EV charging, heat pumps)
• Provide flexible access (with restrictions) alongside firm access
• Integrate local flexibility solutions (storage, demand response)
• Coordinate with low-voltage operators and gas networks

Comparisons to Sweden

Relevance to wiki

• Distribution Network Development Plan: Portugal is one of only 4 EU countries with quantified DNDP flexibility needs; ERSE opinion provides the most detailed published example of NRA CBA requirements for flexibility vs. reinforcement
• Villkorade Avtal: Acesso com restrições is Portugal’s structural equivalent; ERSE’s explicit recommendation for E-Redes to actively publish restricted capacity and enable storage business models mirrors the direction of Art. 6a
• Ei: TOTEX in force in Portugal since 2022 — ahead of Sweden’s RP5 timeline; provides evidence for TOTEX reform effectiveness
• Flexibility Market: E-Redes’ FIRMe programme (see Source - E-Redes FIRMe Programme) is Portugal’s local flexibility market — consistent with ERSE’s push for market-based solutions
• Source - E-Redes PDIRD-E 2024 Proposta Inicial: the primary source document (E-Redes’ own proposal); contains the full reserve price methodology, FIRMe probabilistic planning approach, and project-level details for all 7 flexibility alternatives