The traditional focus on the levelized cost of energy (LCOE) can no longer be the sole driving criteria for decision making on solutions to accelerate economic growth and a clean energy transition. A new lens is needed around System Value.
The System Value framework more holistically evaluates economic, environmental, social and technical outcomes of potential energy solutions. The framework aims to shift political and commercial focus beyond cost to include value. Policies, investments, and solutions can be evaluated to assess their impact on the outcomes that the electricity system of the future should support.
To demonstrate the framework, analyses were carried out across multiple diverse markets across the globe. While recovery solution areas differ by market, the framework enabled a holistic comparison of solutions across all contexts. Links to the 5 market analyses can be found at the top of the page.
This analysis also yielded no-regret solutions based on maximising system value. A common path emerged, the 'Path to maximising System Value'. Core elements common to all markets include efficiency, grids and renewables. Only when reaching 20-30% annual variable renewables in electricity generation mix (and >50% at a given time), markets will encounter barriers which will require associated power market reform, as well as smart flexibility solutions and demand optimisation. Deploying solutions to these challenges will accelerate markets beyond the pivot point towards an integrated energy system delivering net-zero GHG emissions.
The System Value framework can be used to support a diverse range of activities including investment decisions, policy decisions, as well as public-private dialogues between business, regulators and policy makers on solutions to accelerate economic growth and a clean energy transition.
The path to maximise System Value
“Shifting the narrative of the energy transition towards system value is critical for society and the economy.”
—Henrik Anderson, CEO Vestas Wind Systems
With special thanks to Henrik Andersen, CEO of Vestas and Chair of the World Economic Forum's Electricity Industry community for leading this work in collaboration with CEOs from electricity companies around the world.
Additional thanks to the team at Accenture for supporting the work.