Planning a carbon-neutral and reliable electricity system requires a full system, holistic perspective that provides the tools to understand the total system value and cost of the electricity system. However, traditional indicators such as the levelized cost of electricity (LCOE) assess technologies in isolation and offer a simplified view of costs, failing to capture system-wide interactions and the complementary roles of diverse power assets. As electricity systems decarbonize, these limitations become more pronounced, as planners should address flexibility to balance variable renewable output, adequate firm capacity to maintain resource adequacy, grid reinforcement to integrate new resources, and resilience to withstand disturbances. Focusing narrowly on clean generation rather than clean systems increasingly limits the relevance of conventional cost metrics for policy and planning. 

Emerging frameworks for full system cost assessment address these gaps by evaluating not only energy production but also contributions to grid infrastructure, flexibility, firm capacity and resilience.  The full system cost assessment complements LCOE and other cost indicators, offering a clearer understanding of the economic implications of integrating different technologies into a modern electricity system under deep decarbonization pathways. 

To fully realize the value of such whole-system approaches, greater standardization of power system modelling practices is required. Aligning assumptions on scenario design, treatment of uncertainty and the system capabilities that models are expected to deliver is essential for transparent and comparable assessments. Cost-optimization modelling alone cannot capture the full picture, but a stronger emphasis on evaluating multiple scenarios and system performance outcomes can enhance policy-relevant insights. As modelling efforts converge around common definitions of system capabilities and how to measure them, this alignment can bridge the gap between technical analysis and practical policy guidance, supporting more effective market design and decision-making in the transition to a carbon-neutral electricity system.[1]

Main outcomes of the solution 

• Affordability: Supports cost-effective system planning by incorporating the full set of system costs, helping avoid misallocation of capital and reducing long-term expenditures. This enables investments in portfolios that may have higher plant-level costs but lower total system costs. 
• Reliability & Flexibility: Captures operational requirements associated with integrating variable renewable energy, firm low-carbon technologies, storage and demand-side flexibility, enabling portfolios that can meet demand under variable conditions. 
• Institutional Efficiency & Transparency: Provides a consistent and transparent framework for comparing technologies based on their full system value, improving decision-making and strengthening communication of trade-offs across institutions and stakeholders. 

Key deployment and scaling factors: 

1. Adopt whole-system cost assessment methodologies through agreement among planners, regulators and system operators. 
2. Ensure availability of robust data on system operations, grid investments, flexibility needs and resource adequacy. 
3. Develop analytical capability to model decarbonization scenarios and evaluate interactions across supply, storage, demand and grid assets. 
4. Coordinate among public institutions, research organizations and industry participants to maintain consistent application of the framework. 
5. Establish transparent assumptions, data governance and open protocols to support replicability and stakeholder trust. 

Case Study 

UNECE, LSE, NTNU, EPRI, WRI, Quantified Carbon, Newcleo, World Nuclear Association (2025), Global

In 2025, UNECE began piloting the System Cost Breakdown of Electricity (SCBOE) framework to support future electricity-system planning, reflecting a broader shift in policy thinking from a focus on clean generation toward the performance of clean electricity systems as a whole. The pilot involves collaboration with the London School of Economics, NTNU, EPRI, the World Resources Institute, Quantified Carbon, Newcleo and the World Nuclear Association. 

The pilot examines how electricity-system costs evolve under multiple decarbonization pathways by assessing the full suite of system needs rather than evaluating technologies on generation cost alone. In doing so, the approach moves beyond cost-optimisation modelling focused on least-cost outcomes and places greater emphasis on scenario evaluation and system performance under different assumptions. UNECE notes that the framework captures dimensions such as grid infrastructure requirements, flexibility to balance variable renewable generation, system adequacy from firm low-carbon resources, and resilience across a range of operating conditions. 

By modelling these system-level interactions using more consistent definitions of system capabilities, the initiative highlights the importance of standardizing modelling practices across scenario design, treatment of uncertainty and performance metrics. This alignment is intended to enable more transparent and comparable power system assessments, providing planners and policymakers with a stronger basis for comparing technology portfolios, identifying long-term investment needs and designing cost-effective pathways to resilient, carbon-neutral electricity systems. This work helps mainstream full-system thinking, ensuring that energy sources are assessed based on their total contribution, not just plant-level cost. The pilot is ongoing, and results are intended to inform future national and regional planning processes across UNECE member states.[1] 

References: 

1. UNECE and partners launch initiative to develop a full system cost approach to guide investments towards resilient and carbon-neutral electricity systems  | UNECE (December 2025)