Cost analysis of energy conversion systems via a novel resource-based quantifier

The paper presents a new formalism for the costing of production chains, with special emphasis on energy conversion systems. From a mathematical point of view, this method can be described as a standard Leontiev-type input-output technique, in the formulation commonly adopted by most costing theories, including Thermoeconomics. Any complex production chain can be decomposed into modules, to each one of which mass and energy balances are applied. The resulting flow diagram is then examined from an exergetic point of view, and a cost analysis is performed. The costing paradigm is the novel feature here: rather than monetary units, a resource-based quantifier, called “extended exergy”, is employed. It is argued that both labour and financial costs can be properly linked to an equivalent resource consumption through a back-to-resource accounting procedure that expresses the total exergy consumption required to “generate” one man-hour of work or one monetary unit of currency circulation. Environmental remediation costs are similarly taken into account by computing the equivalent cumulative exergy expenditures required to achieve zero impact. It is argued, and discussed on the basis of an example of application to a cogeneration plant, that the new technique, called Extended Exergy Accounting (EEA), is a substantial improvement with respect to current engineering economic techniques, including Thermoeconomics. It is shown that EEA calculates the real, resource-based “value” of a commodity (which is not necessarily equal to its monetary cost) thus enabling Analysts and Energy Planners to perform a more complete and meaningful assessment of an Engineering Complex System. The decisive advantage of EEA consists in its being entirely and uniformly resource-based: in this respect, it owes some of its structural formalism both to the economic theory of production of commodities, which it extends by accounting for the unavoidable energy dissipation in the productive chain, and to resource-oriented economics. It must be acknowledged as well that EEA follows a path originally proposed by Szargut in his “Cumulative Exergy Consumption” method, which it extends by providing a rational and uniform treatment for all non-externalities.