The LCOE calculation makes no allowance for transmission costs on the grounds that these apply more or less equally to all technologies. This is an assumption that may not be entirely valid. Two obvious cases serve to make the point. The first is the case of wind generators that, in Europe, are predominantly located on the west coast. In North America the preferred location is the Great Plains. Both areas are relatively remote from population centres. The second case is nuclear power where, for reasons of safety, remote locations are preferred. In both these cases it may be necessary to install a major transmission line where none existed before. The omission of this cost represents a bias in favour of these technologies

A second factor is that transmission lines are designed and built to carry the maximum power output of the generators, which that the lines serve. Since, on average, renewable generators operate at a fraction of their nominal output, they will not fully use the capacity of the lines and this represents an overinvestment in resources. In this case the effect is likely to be small because we are only concerned with an effect at the margin — i. e. it is only the size of the transmission line, not its existence, that is in question.

Hidden subsidies

LCOE takes no account of hidden subsidies such as limited liability in the event of a nuclear accident. Without this, nuclear utilities would find it impossible to obtain insurance for low-probability, high-consequence accidents and the technology would probably become commercially non-viable. Other hidden subsidies may include government funding for research and development, and regulatory fees.