The Pego plant located 150 kilometers (90 miles) northeast of the Portuguese capital Lisbon stopped generating over the weekend, as Portugal became the fourth European Union country to stop burning coal to produce electricity.
Portugal has no coal, oil or gas, which are all imported, and has been investing heavily in green energy in recent decades.
"Coal's dire economics and public desire for climate action are driving faster and faster phase outs across Europe," said Kathrin Gutmann, campaign director for Europe Beyond Coal, which aims to ensure coal is phased out in Europe by 2030.
Coal power is the single biggest source of greenhouse gas emissions.
"The challenge now is to ensure utilities do not make the mistake of replacing coal with fossil gas, or unsustainable biomass," Gutmann said said in a statement.
But proposals for the continued use of Pego, which is out to tender, include biomass.
Portuguese Environment Minister Joao Pedro Matos Fernandes says other proposals proposals include solar energy and electric vehicle production. Proposals must be presented by Jan. 17.
"Freeing ourselves from our biggest source of greenhouse gases is a momentous day for Portugal. But it is soured by the prospect of the plant being converted to burn forests," said Francisco Ferreira, head of the Portuguese environmental association ZERO.
"Ditching coal only to switch to the next worst fuel is clearly not an answer," he said.