The EU energy transition needs to look beyond LCOE

The document critiques the over-reliance on Levelised Cost of Electricity (LCOE) in EU energy policy, noting that while it provides a project-level cost snapshot, it fails to account for system-wide needs, dispatchability, and the full cost to ratepayers. It advocates for a systems-level approach that integrates diverse generation, storage, and demand-response technologies to ensure a reliable, low-carbon grid.

• LCOE is widely used by EU policymakers and Member States to guide investment and compare technologies, including in the European Commission's impact assessment for the 2040 Climate Target Plan and national strategies in France and Italy.
• LCOE has significant limitations for informing policy because it ignores macro-scale grid needs, the specific generation profile of technologies, and costs borne by ratepayers rather than developers.
• Over-reliance on LCOE may hinder grid decarbonisation by incentivising variable renewables while neglecting the need for clean firm power, leading to a continued dependence on fossil fuels for firming.
• LCOE underestimates the total cost for end users because it excludes system costs for storage, transmission, and distribution.
• To ensure a reliable and decarbonised grid, the EU should adopt system-level analysis that accounts for spatial and temporal variability, societal trade-offs, and a diverse mix of transmission, storage, clean firm, and demand-response technologies.

APA

Clean Air Task Force (n.d.). The EU energy transition needs to look beyond LCOE. https://cdn.catf.us/wp-content/uploads/2025/09/09082340/CATF-The-EU-Energy-Transition-LCOE-Factsheet-.pdf

Chicago

Clean Air Task Force. The EU energy transition needs to look beyond LCOE. n.d. https://cdn.catf.us/wp-content/uploads/2025/09/09082340/CATF-The-EU-Energy-Transition-LCOE-Factsheet-.pdf.

Wikipedia

{{cite report |author=Clean Air Task Force |title=The EU energy transition needs to look beyond LCOE |url=https://cdn.catf.us/wp-content/uploads/2025/09/09082340/CATF-The-EU-Energy-Transition-LCOE-Factsheet-.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cleanairtaskforcendenergy, author = {{Clean Air Task Force}}, title = {{The EU energy transition needs to look beyond LCOE}}, institution = {Clean Air Task Force}, url = {https://cdn.catf.us/wp-content/uploads/2025/09/09082340/CATF-The-EU-Energy-Transition-LCOE-Factsheet-.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }