Value chain · CLM-0301
In plain terms
The IEA itself says plain LCOE misses how useful a power plant is to the wider electricity system, which is why it built a second, add-on metric.
The claim as recorded
IEA and the OECD Nuclear Energy Agency state in their own methodology that LCOE "is not a complete metric of competitiveness, as it lacks representation of the value provided to the system," and that in systems with large shares of variable renewables "one must complement cost considerations with value considerations, or, equivalently, account for costs at the system rather than at the plant level," which is the stated reason they built VALCOE as a supplementary metric.
Scope and limits
A methodological statement by the metric's own publisher, not a technology-specific finding. It does not by itself say by how much any technology's standing changes; see section 3 of this note for the sizes found.
What it assumes
No assumptions are recorded against this claim.
Where it comes from
PSRC-01 p.33 quoted above; p.75: "the LCOE is not a complete metric of competitiveness, as it lacks representation of the value provided to the system. Power generation technologies primarily generate electricity (or energy) but also provide other services that are critical to the adequacy, reliability and quality of electricity supply."
Related records
- Answers question
- QST-021 not published in this release
Cite this
energyaperture.com/c/clm-0301
CLM-0301, Energy Aperture, as of 2020-12.
Connected records
Other published records linked to this one. A list, not a judgement.
- Also from SRC-161
- CLM-0300The main international definition of LCOE is the flat price per unit of electricity a power plant would need to be paid, every year of its...CLM-0304The interest rate assumed changes an LCOE figure a lot, and most for plants that cost the most to build: in a 2020 international study...CLM-0305How long a power plant is assumed to last matters much less to its cost per unit of electricity than the interest rate does.CLM-0308The IEA's alternative metric adds credit for how much a power plant helps keep the grid reliable, on top of its raw energy cost, but the...
- Cited in articles