This page is based on the paper Petrakopoulou & Batuecas (2021), “Introduction to an exergy-based socioeconomic analysis”, Energy Conversion and Management 249, 114853.
Electricity powers our everyday lives, but producing it also affects our climate, the air we breathe, and the natural resources we depend on. These impacts impose real costs on society that are rarely reflected in the price we pay for electricity.
The price of electricity from a gas power plant covers the fuel, the equipment and the staff who run it. The costs of its emissions, such as effects on public health, the climate and ecosystems, are left out. These hidden costs are ultimately borne by society, both today and in the future.
The exergy-based socioeconomic analysis (ESEC) is a method that puts that damage back on the bill. It helps engineers design energy systems that are not only cost-effective for their operators, but also better for society as a whole.
Power plants are designed years before they are built, and once built they run for decades. The choices made at the drawing board lock in costs and damage for a very long time. The tools engineers use to make those choices have two blind spots.
Pollution, climate change, and health impacts come with real costs, but these are largely borne by society rather than the power plants that cause them. Economists call these external costs.
When these costs are ignored, an energy system that appears cheapest may actually be the most expensive for society, while a cleaner alternative may seem less attractive than it really is.
One analysis identifies the cheapest design, another the cleanest, and another the most efficient. But their conclusions often differ.
For example, a power plant that captures its CO₂ emissions may be better for the climate, but it also requires additional equipment and energy. An economic analysis may favor one design, while an environmental analysis favors another. Without a common basis for comparison, it is difficult to determine which design is best for society as a whole.
Pick a lens to see what it tells you and what it misses.
Turn environmental damage into euros, add it to the plant's normal costs, and follow all of it through the plant, part by part.
A life cycle assessment counts the materials used to build the plant and everything it releases while it runs, from CO₂ to fine particles. It covers a wide range of impacts, from climate change to water use.
European damage-cost estimates turn each kind of harm into euros. A kilogram of CO₂, for example, causes about 4 cents of damage. Now money and harm share one unit.
An exergy analysis shows where each component wastes useful energy. The costs follow the same path, so every compressor, turbine and burner gets its true cost to society.
Energy is never destroyed; it only changes form. But it does lose quality. The energy in natural gas can drive a turbine, while the same amount of energy spread as warm air around the plant can do almost nothing. Exergy measures that quality: the part of energy that can still do useful work.
Following exergy shows exactly where a plant wastes the most. Because ESEC expresses everything in euros, it can compare a more efficient turbine, a cleaner fuel and a cheaper material on the same scale, and point to the component where an improvement does the most good.
Europe has to rebuild much of its energy system in the coming decades. Choosing well means counting everything a technology costs, including what it costs others.
When environmental and social costs are included, the true value of cleaner technologies becomes clearer. Energy systems can then be compared on what they really cost, not just what they cost to build and operate.
Engineers can identify which components offer the greatest potential for improvement, understand trade-offs between cost, efficiency, and environmental impacts, and make better-informed design decisions.
Decision makers see how large the hidden costs are, and how much a carbon price or support scheme would need to cover to make the cleaner option pay off.
The method was tested on two gas power plants that burn the same amount of fuel. The first is a standard combined-cycle plant that releases its CO₂. The second is a proposed design based on chemical looping combustion, an emerging technology that could make CO₂ capture easier and more energy-efficient.
Capturing CO₂ takes extra equipment and energy, so on normal accounts the second plant's electricity is clearly more expensive. But the first plant causes much more climate damage. Which one is really cheaper?
With the study's own damage values, the capture plant's extra cost falls from 23.5% to 7.2%. The capture plant would become the cheaper option for society if all damage were valued about 1.7 times higher or, counting only climate damage, at a CO₂ price of about 67 € per tonne.
ESEC also reveals a trade-off. The capture plant cuts its climate impact by more than 80%, but it does worse on almost every other environmental impact, because it uses more equipment and gets less electricity from the same fuel. Putting all of these effects on one scale is exactly what the method is for.