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Basic Physical Processes and Economics

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This first chapter provides the reader with the background theory on the physics and the economics necessary to fully understand the material presented in the rest of the book. The starting point of the chapter is a discussion of the concept of energy and the definition of important notions related to this concept, such as the various units used in science and engineering. The Earth-Sun energy system, including the famous greenhouse effect, are then presented. Finally, the basic economic terms related to energy plants, pricing and production are discussed.


  • Matter
  • Energy
  • Power
  • Climate
  • Levelized and indirect costs of energy

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  1. 1.

    The SI-systems has four more basic units: the Kelvin for temperature, the candela for luminous inensity, the ampere of electric current and the mole for the amount of substance.

  2. 2.

    Remember that 1 TJ = 1,000,000 MJ.

  3. 3.

    Zero temperature is a real theoretical limit. Quantum mechanics forbids any system to reach zero temperature.

  4. 4.

    These quantities are due to the chemical properties of the two combined elements.

  5. 5.

    Nuclear forces only act on small distances and rapidly decay outside the size of the nucleus—fortunately!

  6. 6.

    More precisely it is called surface power density.

  7. 7.

    We do not here consider that the nucleons are built of more elementary particles called quarks.

  8. 8.

    After the famous Danish physicist Niels Bohr who put forward the first quantum theory of the hydrogen atom in 1913.

  9. 9.

    In 2014, the concentration of carbon into the atmosphere already exceeds 400 ppm.

  10. 10.

    A sunk cost is a cost that has already been incurred and which cannot be recovered.

  11. 11.

    The concept of time value of money relies on the rule that a euro today is worth more than a euro tomorrow.

  12. 12.

    The merit order is a way of ranking different energy sources based on their cost of generating power.

  13. 13.

    A Feed-in Tariff means that a fixed price is guaranteed for each kWh fed into the electricity grid for the first few years of a project. Such measures are implemented to support the deployment of a technology which would not be able to compete otherwise.

  14. 14.

    Also referred to as overnight costs in some studies.

  15. 15.

    Cost or benefit not transmitted through price.


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Correspondence to Patrick A. Narbel .

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Narbel, P.A., Hansen, J.P., Lien, J.R. (2014). Basic Physical Processes and Economics. In: Energy Technologies and Economics. Springer, Cham.

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