Accurately
describing excited states within Kohn–Sham (KS)
density functional theory (DFT), particularly those which induce ionization
and charge transfer, remains a great challenge. Common exchange-correlation
(xc) approximations are unreliable for excited states owing, in part,
to the absence of a derivative discontinuity in the xc energy (Δ),
which relates a many-electron energy difference to the corresponding
KS energy difference. We demonstrate, analytically and numerically,
how the relationship between KS and many-electron energies leads to
the step structures observed in the exact xc potential in four scenarios:
electron addition, molecular dissociation, excitation of a finite
system, and charge transfer. We further show that steps in the potential
can be obtained also with common xc approximations, as simple as the
LDA, when addressed from the ensemble perspective. The article therefore
highlights how capturing the relationship between KS and many-electron
energies with advanced xc approximations is crucial for accurately
calculating excitations, as well as the ground-state density and energy
of systems which consist of distinct subsystems.