Least-cost planning

Least-cost planning (LCP) is a planning approach in the energy industry aimed at exploiting existing energy-saving potential.
It is based on the integration of supply-side and demand-side management. While supply-side management has to do with the efficiency of energy generation, acquisition, transport and distribution, demand-side management measures systematically influence customer demand for the different forms of energy. Through allowance for external factors it is also possible to optimize the entire social cost in energy planning.

LCP is based on the principle that in this conversation chain economic potential for energy saving is often not utilized because of lack of information. Although it is an established planning procedure, coming initially from the USA, its practical feasibility is still being tested in Europe in pilot projects. One of the reasons for the limited use of least cost planning in Europe is the absence of economic incentive mechanisms and the strong influence of political lobbies in the energy sector.