Incomplete metrics like LCOE (Levelised Cost of Energy) create unintended consequences, hiding waste and sub-optimal outcomes. When the measure becomes the target, gaming distorts decisions, undermining the idea that ‘what gets measured gets managed.’

Be Mindful of Measurement

Metrics often force square pegs into round holes, especially for climate, social, and biosphere impacts. LCOE, a broad-brush technology focus, misses full life-cycle spheres. For example, solar panels aid decarbonisation but will generate massive waste by 2050; huge volumes from 25-year lifecycles, unrepairable, with $15B in lost silver, copper, silicon value. LCOE ignores systemic costs.

This matters because it illustrates how LCOE fails to embed nuance: to capture the range of systemic cost, waste and risk. As a result, fails to capture opportunities foregone. To leave so many gaps when attention is focussed on reducing emissions risks underestimates both true expenses, and impacts.

Full system costs avoid surprises, disruptions, lost environmental or health costs affecting whole economies: micro to macro. LCOE assumes uniformity, overlooking locational and temporal value: grid congestion, resource quality, supply failures. Grid costs vary by demand, speeds and magnitudes; fragmentation causes losses, as in recent Chile and Iberian outages affecting millions of people, businesses and economies. Irregular demand hikes transmission expenses. With net-zero racing ahead via variable clean power, hidden costs blur reality, with risk to continuity.

The Big Investments

Trillions of US dollars are planned to be invested in renewable energy based on incomplete information. The consequences of this will be systems that appear inexpensive and robust could in truth be expensive and unreliable.

Accounting for power when it is delivered with real-time pricing could reflect how value aligns with physics, systems and capital.

As a result, investors can accurately determine quickly what works and what doesn’t and look to cost alternatives that meet needs more appropriately. As a consequence, investors can balance:

• Affordability
• Reliability
• Decarbonisation

This is economic efficiency, not technical complexity.

System-Based Metrics for LCOE

Link generation, capacity, delivery, costs, and marketplace value by place and time. This expands options: microgrids, behind-the-meter generation, levelised balance costs for symbiotic industries (desalination, hydrogen, ammonia, steel, data centres, mobility…).

The sustainable viable approach connects the interplay between generation, capacity, delivery with generation cost opening the decision space to scope alternatives. This matters since investors can now calculate avoided cost of electricity such as costs that would have been incurred if a new generation project was to replace an old so capturing the avoided cost in to the system. This will bring transparency to net-zero ambitions with appropriate financial certainty as key objectives can be captured:

• Cost
• Reliability
• Sustainable Viability

Such an approach will spur innovation toward clean, secure, long-term durable electricity generation technologies such as Electra.

Adding firm and dispatchable low-carbon technologies backed by system view metrics removes the blindness to inefficiencies and delivery gaps between capacity and dispatch and inclusion of whole costs, cost avoided, and opportunity foregone.

New Era Electra Dashboard

A new era of dashboard metrics can be born. Transparent, multidimensional planning and standardised metrics for truth in comparability for electricity promoting options across multiple dimensions. This will help build increased trust across both utilities, industries and all concerned parties as a Sphere Economy emerges.

Christopher Gleadle

CEO – SV-Electra