The role of storage and flexibility in the energy transition: Substitution effect of resources with application to the Portuguese electricity system

The energy transition, characterized by the decarbonization of energy consumption through electrification, needs a massive integration of non-dispatchable renewable electricity generation, along with storage systems and demand flexibility to manage the variability and uncertainty inherent of these sources. Within this framework, understanding the dynamic interaction among system resources becomes crucial to assess the adequacy of future electricity systems performance. This study aims to evaluate the extent to which new electricity resources will complement or substitute each other in integrating non-dispatchable electricity generation. Using the SWHORD simulator, we investigated the Portuguese power system's for the 2030 horizon, evaluating the coherence of targets outlined in the National Energy and Climate Plan (NECP 2030) while considering interactions among demand-side flexibility and storage options. A significant substitution effect is identified among demand resources, including electric vehicles, hydrogen production, hydro-pumping storage, and battery storage systems. Furthermore, we confirm the consistency of targets set in the Portuguese NECP 2030 and highlight their strong interdependence, particularly concerning renewable and hydrogen targets.