The hidden costs of electricity and their impact in the system

In order to promote energy efficiency and the use of renewable (endogenous) energy sources, the Portuguese government launched several programs and reforms, starting in 2001 with the E4 Program. This new energy policy instrument aims to improve the national competitiveness and improve the social welfare, while preserving the environment. These and other incentive programs introduce market distortions that are not fully evaluated. The present paper focus on the overall efficiency, which is divided in the following key areas: resource exploitation and ecosystems conservation (environment), innovation and competitiveness (economy) and employment and power purchase parity (social welfare). The results are focused not only on the supply side, but also on demand side (how consumers use energy), analyzing the promotion of renewable energy and the fostering of energy efficiency and savings in Portugal.