The Government of Portugal has announced plans to implement a new capacity mechanism aimed at strengthening electricity supply security and ensuring power availability during periods of peak demand, as the country continues to electrify its economy and energy consumption.

The mechanism will be developed through competitive procedures and will be open to different technologies and solutions, including power generation, energy storage and demand-side management. According to the Ministry of Environment and Energy, the goal is to ensure the availability of capacity at the lowest possible cost for households and businesses.

The decision follows the conclusions of the Electricity Supply Security Assessment Report (RMSA-E), prepared jointly by the Directorate-General for Energy and Geology (DGEG), transmission system operator REN - Redes Energéticas Nacionais and energy regulator ERSE - Entidade Reguladora dos Serviços Energéticos.

Report highlights need for additional capacity

The study assessed several future scenarios for Portugal’s electricity system using the European methodology for security of supply evaluations. According to the report, the expected growth in electricity demand driven by electric vehicles, industrial electrification and new electricity uses requires additional measures to ensure energy availability during periods of highest demand.

To assess system security, authorities established a reliability standard of 1.46 hours per year, representing the maximum acceptable risk of supply shortages under European criteria and based on consultations with consumers and businesses.

Approval process with Brussels to begin

Environment and Energy Minister Maria da Graça Carvalho said that Portugal is already among the European countries with the highest share of renewable electricity generation and that ensuring energy availability at all times is essential to supporting that transition.

As a next step, the Government will begin the pre-notification process with the European Commission, formally launching the approval procedure required under European state aid and electricity market regulations.

Storage and backup generation included in broader strategy

The capacity mechanism forms part of a broader strategy to strengthen Portugal’s electricity system. Additional measures include investments in combined-cycle natural gas plants, the expansion of energy storage projects, and the deployment of demand response solutions.

As part of this effort, the Government reiterated plans to launch a tender for 750 MVA of battery energy storage capacity, while also supporting the development of pumped hydro storage projects. These initiatives are intended to provide greater flexibility to the power system and support the integration of higher shares of renewable energy.