LISBON, April 3 (Reuters) - For the first time in at least four decades, Portugal’s monthly renewable energy production in March exceeded power demand on the mainland, an industry report said on Tuesday, adding that it expected this to become a trend.

Renewable energy accounted for 103.6 percent of mainland electricity consumption last month, the report by the Portuguese Renewable Energy Association and the Sustainable Earth System Association said citing data from power grid operator REN.

While fossil fuel plants still worked for short periods to complement the electricity supply, those were fully compensated by other periods of greater renewable production.

“Last month’s achievement is an example of what will happen more frequently in the near future. It is expected that by 2040 the production of renewable electricity will be able to guarantee, in a cost-effective way, the total annual electricity consumption of mainland Portugal,” the report said.

“These data, besides indicating a historical milestone in the Portuguese electricity sector, demonstrate that renewable energy can be relied upon as a secure and viable source with which to completely meet the country’s electricity demands.”

Separately on Tuesday the government suspended subsidies for guaranteed power supplies paid to producers, worth about 20 million euros a year, most of which goes to fossil fuel plants left in stand-by mode.

Hydroelectric dams in March accounted for 55 percent of monthly consumption followed by wind power at 42 percent. Portugal, with its long Atlantic coast line, was one of the early pioneers in the mass use of wind power.

March saw four times the monthly average rainfall, ending a long period of severe drought in the country, according to the Portuguese Sea and Atmosphere Institute. The downpour refilled most of the dammed reservoirs to levels of over 80 percent.

The renewable generation reduced Portugal’s carbon dioxide emissions by 1.8 million tons and helped the country’s export balance.

The average daily wholesale market price fell to 39.75 euros per MWh from 43.94 euros a year earlier, when renewables were able to meet only 6 percent of the electricity demand amid the drought.

Portugal’s electricity prices are among the highest in the European Union. (Reporting By Andrei Khalip, editing by Axel Bugge and Hugh Lawson)