Abstract The goal of this research is to analyse the cost-effective opportunities in continental Portugal to achieve full decarbonisation of the electricity generation sector by 2050. Since interconnection with neighbouring Spain may be one of the key drivers to achieve a cost-effective low carbon pathway, combined with new generating technologies, we evaluate its importance by modelling the Portuguese system either as an isolated or as part of an integrated Iberian system. To design the low carbon roadmap for 2050 in Portugal, TIMES – The Integrated MARKAL-EFOM (MARKet ALlocation-Energy Flow Optimisation Model) System was used. It is an optimization partial equilibrium bottom-up model generator that finds the minimal cost solution for an energy system over a certain time period. Our approach accounts for the short term dynamics of supply and demand to enable a better match and optimize resources complementarities. The results show that modelling Portugal as an isolated system can lead to underinvestment and underuse of the country's endowment of renewable energy sources in the longer term, which reduces the efficiency of investment. The modelling of Portugal as an interconnected energy system can therefore have a significant impact on the design of a sustainable electricity system and lead to improved investment efficiency with lower costs risk.