Energy and the State of Nations

The mathematical conditions for the existence of macroeconomic production functions that are state functions of the economic system are pointed out. The output elasticities and the elasticities of substitution of energy-dependent Cobb-Douglas, CES and LinEx production functions are calculated. The output elasticities, which measure the productive powers of production factors and whose numerical values have been obtained for Germany, Japan, and the USA, are for energy much larger and for labor much smaller than the cost shares of these factors. Energy and its conversion into physical work accounts for most of the growth that mainstream economics attributes to “technological progress” and related concepts. It decisively determines the economic state of nations. Consequences for automation and globalization and perspectives on growth are discussed.energy; economic growth; macroeconomic production functions; output elasticities

A methodology to estimate security of supply in electricity generation: results for Germany until 2030 given a high level of intermittent electricity feed-in

In this paper, we develop a methodology for deriving a consistent measure for supply adequacy in the power generation sector. We especially consider the secured generation capacity of intermittent renewable energy sources such as wind. Availability of conventional power plants is estimated through stochastic convolution of unscheduled non-usabilities. We employ our methodology to measure supply security in Germany until 2030. A detailed market analysis of power plants that are currently being built or planned provides support to our analysis for the short term. For the long term, we rely on a large-scale dispatch and investment model of the European power sector to account for the embedding of the German electricity sector in the European market. We analyze two scenarios: one with prolongation of nuclear power plants and one with a nuclear phase-out. Our results show that, even though intermittent renewables only provide very limited secured generation capacity, security of electricity supply in Germany can be assured until 2015. In the long term, the need for backup capacity for renewable energy sources increases as well as the need for electricity imports.Supply adequacy; integration of renewable energy sources; power generation; German power sector; secured generation capacity

The costs of electricity systems with a high share of fluctuating renewables - a stochastic investment and dispatch optimization model for Europe

Renewable energies are meant to produce a large share of the future electricity demand. However, the availability of wind and solar power depends on local weather conditions and therefore weather characteristics must be considered when optimizing the future electricity mix. In this article we analyze the impact of the stochastic availability of wind and solar energy on the cost-minimal power plant mix and the related total system costs. To determine optimal conventional, renewable and storage capacities for different shares of renewables, we apply a stochastic investment and dispatch optimization model to the European electricity market. The model considers stochastic feed-in structures and full load hours of wind and solar technologies and different correlations between regions and technologies. Key findings include the overestimation of fluctuating renewables and underestimation of total system costs compared to deterministic investment and dispatch models. Furthermore, solar technologies are - relative to wind turbines - underestimated when neglecting negative correlations between wind speeds and solar radiation.Stochastic programming; electricity; renewable energy

Scenarios for an Energy Policy Concept of the German Government

In this working paper we demonstrate how challenging greenhouse gas reduction targets of up to 95% until 2050 can be achieved in the German electricity sector. In the analysis, we focus on the main requirements to reach such challenging targets. To account for interdependencies between the electricity market and the rest of the economy, different models were used to account for feedback loops with all other sectors. We include scenarios with different runtimes and retrofit costs for existing nuclear plants to determine the effects of a prolongation of nuclear power plants in Germany. Key findings for the electricity sector include the importance of a European-wide coordinated electricity grid extension and the exploitation of regional comparative cost effects for renewable sites. Due to political restrictions, nuclear energy will not be available in Germany in 2050. However, the nuclear life time extension has a positive impact on end consumer electricity prices as well as economic growth in the medium term, if retrofit costs do not exceed certain limits.Roadmap 2050; GHG reduction; renewable energies; carbon capture and storage; power plant fleet optimization

German Nuclear Policy Reconsidered: Implications for the Electricity Market

In the aftermath of the nuclear catastrophe in Fukushima, German nuclear policy has been reconsidered. This paper demonstrates the economic effects of an accelerated nuclear phase-out on the German electricity generation sector. A detailed optimization model for European electricity markets is used to analyze two scenarios with different lifetimes for nuclear plants (phase-out vs. prolongation). Based on political targets, both scenarios assume significant electricity demand reductions and a high share of generation from renewable energy sources in Germany. Our principal findings are: First, nuclear capacities are mainly replaced by longer lifetimes of existing coal-fired plants and the construction of new gas-fired plants. Second, fossil fuel-based generation and power imports increase, while power exports are reduced in response to the lower nuclear generation. Third, despite the increased fossil generation, challenging climate protection goals can still be achieved within the framework of the considered scenarios. Finally, system costs and electricity prices are clearly higher. We conclude that the generation sector can generally cope with an accelerated nuclear phase-out under the given assumptions. Yet, we emphasize that such a policy requires a substantial and costly transformation of the supply and the demand side.Nuclear policy; climate protection; renewable energy; electricity market modeling

Charakteristika der staatlichen Einbindung von Eliten und Bevölkerung in Ideokratien

"This paper shows that ideocracies, especially communist ideocracies, have a specific pattern of cooptation and incorporation of elites and ordinary citizens, which is different from all other political regime types. Ideocracies dominate society through and through by a net of measures that make the citizens materially dependent on the state, from which the individual citizen cannot escape. The strong concentration of the distribution of goods and positions in the hands of the ideocratic state goes hand in glove with the great power to repress non - co - opted people. However, there are trade - offs in the ideocratic pattern of cooptation. The tendency of ideocracies to infantilize its citizens, may provoke reluctance even among otherwise politically indifferent citizens. Nevertheless, despite the trade - offs, the specific pattern of cooptation and incorporation of citizens and elites might help to explain why communist ideocracies were very durable in comparison to other types of political regimes." (author's abstract

How energy conversion drives economic growth far from the equilibrium of neoclassical economics

Energy conversion in the machines and information processors of the capital stock drives the growth of modern economies. This is exemplified for Germany, Japan, and the USA during the second half of the 20th century: econometric analyses reveal that the output elasticity, i.e. the economic weight, of energy is much larger than energyʼs share in total factor cost, while for labor just the opposite is true. This is at variance with mainstream economic theory according to which an economy should operate in the neoclassical equilibrium, where output elasticities equal factor cost shares. The standard derivation of the neoclassical equilibrium from the maximization of profit or of time-integrated utility disregards technological constraints. We show that the inclusion of these constraints in our nonlinear-optimization calculus results in equilibrium conditions, where generalized shadow prices destroy the equality of output elasticities and cost shares. Consequently, at the prices of capital, labor, and energy we have known so far, industrial economies have evolved far from the neoclassical equilibrium. This is illustrated by the example of the German industrial sector evolving on the mountain of factor costs before and during the first and the second oil price explosion. It indicates the influence of the 'virtually binding' technological constraints on entrepreneurial decisions, and the existence of 'soft constraints' as well. Implications for employment and future economic growth are discussed

Service Production Functions

service production, production functions, structural change, technological progress, E23, O30, Q43,

Energy and the state of nations

The mathematical conditions for the existence of macroeconomic production functions that are state functions of the economic system are pointed out. The output elasticities and the elasticities of substitution of energy-dependent Cobb-Douglas, CES and LinEx production functions are calculated. The output elasticities, which measure the productive powers of production factors and whose numerical values have been obtained for Germany, Japan, and the USA, are for energy much larger and for labor much smaller than the cost shares of these factors. Energy and its conversion into physical work accounts for most of the growth that mainstream economics attributes to technological progress and related concepts. It decisively determines the economic state of nations. Consequences for automation and globalization and perspectives on growth are discussed. (C) 2011 Elsevier Ltd. All rights reserved

Energy in Growth Accounting and the Aggregation of Capital and Output

We review the physical aggregation of value added and capital in terms of work performance and information processing and its relation to the deflated monetary time series of output and capital. In growth accounting it complements the time series of labor and energy, measured in hours worked per year and kilowatt-hours consumed per year, respectively. This aggregation is the conceptual basis on which those energy-dependent production functions have been constructed that reproduce economic growth of major industrial countries in the 20th century with small residuals and output elasticities that are for energy much larger and for labor much smaller than the cost shares of these factors. Accounting for growth in such a way, which deviates from that of mainstream economics, may serve as a first step towards integrating the First and the Second Law of Thermodynamics into economics