15

Exergoeconomics and
Exergoenvironmental Analysis
George Tsatsaronis

15.1 Introduction
The objective evaluation and the improvement of an energy-conversion system from
the viewpoints of thermodynamics, economics, and environmental impact require a
deep understanding of
1. the real thermodynamic inefficiencies and the processes that caused them,
2. the costs associated with equipment and thermodynamic inefficiencies as well
as the connection between these two important factors, and
3. possible measures that would improve the efficiency and the cost effectiveness
and would reduce the environmental impact of the system being studied.
Exergoeconomics and exergoenvironmental evaluation provide methods for obtaining this information. Because an exergoenvironmental analysis and evaluation are
conducted in complete analogy to the exergoeconomic ones, in the following sections more emphasis is placed on exergoeconomics, which has been significantly
developed. Exergoeconomics consists of an exergy analysis, an economic analysis,
and an exergoeconomic evaluation.
The term exergoeconomics was coined by the author in 1984 [1] to clearly characterize a combination of exergy analysis with economic analysis, when in this combination the exergy-costing principle (Subsection 15.4.1) is used. In this way, a distinction
can be made between exergoeconomic methods and applications on one side and
other numerous applications on the other side, in which results from a thermodynamic analysis (sometimes including an exergy analysis) and an economic analysis
are presented (under the term thermoeconomic analysis) but without applying the
exergy-costing principle. The case in which the exergy-costing principle is not used
is in general of less interest to scientists and engineers and belongs to the broader
field of thermoeconomics, which is defined as any possible combination or coexistence of a thermodynamic analysis with an economic one, and thus also includes
exergoeconomics. It should be mentioned that, before 1984, all authors were using
the term thermoeconomics to indicate what we call today exergoeconomics. Even
after 1984, and still today, some authors continue to use the term thermoeconomics
(even when the exergy-costing principle is used) instead of the more precise term,
exergoeconomics. This practice, however, contributes to some confusion in the field.
377

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Exergoeconomics and Exergoenvironmental Analysis

The term exergoenvironmental analysis was coined in 2006 by L. Meyer and the
author to characterize the new approach and to avoid confusion with other already
existing terms and approaches.

15.2 Exergetic Analysis

An energy-based analysis identifies only the energy transfers to the environment
as thermodynamic inefficiencies, fails to identify any inefficiency in an adiabatic
process, and misleads the analyst by considering as an inefficiency the heat rejection
to the environment dictated by the second law of thermodynamics. The additional
concept that corrects these misconceptions is the exergy concept.
Exergy is the maximum theoretical useful work (shaft work or electrical work)
obtainable from an energy-conversion system as this is brought into thermodynamic
equilibrium with the thermodynamic environment while interacting only with this
environment [2, 3]. Alternatively, exergy is the minimum theoretical work (shaft
work or electrical work) required for forming a quantity of matter from substances
present in the thermodynamic environment and for bringing the matter to a specified
state. Thus exergy is a measure of the deviation of the state of the system from the
state of this environment.
The thermodynamic environment in exergy analysis (also called reference environment) is a large thermodynamic system in equilibrium, in which the state variables (T0 , p0 ) and the chemical potentials of the chemical components contained
in it remain constant when, in a thermodynamic process, heat and materials are
exchanged between another system and this environment. It is important to note
that no chemical reactions can take place between chemical components contained
in this environment because the latter is not in equilibrium. The thermodynamic
environment is free of irreversibilities and its exergy is equal to zero. The thermodynamic environment, for which we need to use a model, should be as close as
possible to, but is not identical with, the physical environment. The thermodynamic
environment is part of the surroundings of any energy-conversion system. In the
following discussion, the term environment refers to the thermodynamic environment when exergetic considerations are made, and to the physical environment when
environmental impact is studied.
In the absence of nuclear, magnetic, electrical, and surface-tension effects, the
PH
,
total exergy of a system Esys consists of four components: physical exergy Esys
CH
KN
PT
chemical exergy E , kinetic exergy E , and potential exergy E [3]:
PH
Esys = Esys
+ ECH + EKN + EPT

(15.1a)

PH
Esys = m esys
+ eCH + eKN + ePT .

(15.1b)

or

In the preceding equation, m is the mass of the system and e refers to the mass
specific exergy.
PH
The rate of physical exergy E j associated with the jth material stream is
PH
E j = me
PH

j h0 ) T0 (s j s0 )].
j = m[(h

(15.2)

15.2 Exergetic Analysis

379

Here m
is the mass flow rate and e, h, and s denote the specific exergy, enthalpy,
and entropy, respectively, of the material stream. The subscript 0 refers to the
property values of the same mass flow rate at temperature T0 and pressure p0 of the
environment.
The physical exergy of a working fluid can be further split into its thermal (e T )
and mechanical (e M ) exergy components. This splitting may improve the accuracy
of calculations and facilitates an exergoeconomic optimization:
ePH
j = [(h j h j,X) T0 (s j s j,X)] p=const + [(h j,X h j,0 ) T0 (s j,X s j,0 )]T0 =const .
|
{z
} |
{z
}
eT

eM

(15.3)

In the preceding equation, the point X is defined at the given pressure p and the
temperature T0 of the environment.
The chemical exergy is defined as the maximum useful work obtainable as the
system, being at temperature T0 and pressure p0 , is brought into chemical equilibrium with the environment. Thus, for calculating the chemical exergy, not only the
temperature and pressure but also the chemical composition of the environment has
to be specified. Because our natural environment is not in equilibrium, there is a
need to model an exergy-reference environment [35]. The use of tabulated standard
chemical exergy values for substances contained in the environment at standard conditions (Tref = 298.15 K, pref = 1.013 bar) facilitates the calculation of exergy values.
The effect of small variations in the values of T0 and p0 on the chemical exergy of
reference substances might be neglected in practical applications.
The chemical exergy of an ideal mixture of N ideal gases is
e CH
mixture

ideal gases

N
X

0
xl e lCH + RT

l=1

N
X

xl ln (xl ) .

(15.4)

l=1

Here e lCH is the standard molar chemical exergy of the lth substance, and xl is
the mole fraction of the lth substance in the system at T0 .
For solutions of liquids, the chemical exergy can be obtained with the aid of the
activity coefficients l :
CH
=
e solution

N
X
l=1

0
xl e lCH + RT

N
X

xl ln(l xl ).

(15.5)

l=1

The standard chemical exergy of a substance not present in the environment

can be calculated by considering a reversible reaction of the substance with other
substances for which the values of standard chemical exergy are known [3].
The change in total exergy of a closed system undergoing a change from state 1
to state 2 (E2 E1 ) is caused through transfers of energy in the form of work and
heat between the system and its surroundings and is given by
E2 E1 = EQ12 + EW12 ED.

(15.6)

The exergy transfer EQ12 is associated with heat transfer Q12 , and the exergy
transfer EW12 is associated with the transfer of energy by work W12 .

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Exergoeconomics and Exergoenvironmental Analysis

A part of the exergy supplied to a real energy-conversion system is destroyed

because of irreversibilities within the system. Contrary to mass and energy, the
exergy is not conserved in real systems. The exergy-destruction rate is equal to
ED,k = T0 Sgen,k = T0 mksgen,k.

(15.7)

Hence exergy destruction can be calculated either from the entropy generation
[Eq. (15.7)] by use of an entropy balance or directly from an exergy balance [Eq.
(15.6)]. The term ED,k is equal to zero only in ideal processes.
Thermodynamic processes are governed by the laws of conservation of mass
and energy. These conservation laws state that the total mass and total energy can
be neither created nor destroyed in a process. However, exergy is not generally
conserved but is destroyed by irreversibilities within a system. Furthermore, exergy
is lost when the energy associated with a material or energy stream is rejected to the
environment.
An exergy balance for the kth component at steady-state conditions can be
written as
E F,k = E P,k + E D,k,

(15.8)

where E P,k is the exergy of product (the desired result, expressed in exergy terms,
achieved by the kth component), and E F,k is the exergy of fuel (the exergetic
resources expended in the kth component to generate the exergy of product).
Here it is assumed that the system boundaries used for all exergy balances are
at the temperature T0 of the environment and therefore there are no exergy losses
associated with a component [6]. Exergy losses ( E L) appear only at the level of the
overall system (subscript tot), for which the exergy balance becomes
E F,tot = E P,tot +

n
X

E D,k + E L,tot .

(15.9)

k=1

The following two dimensionless variables are used for the conventional exergetic evaluation of the kth component of a system [3, 6]:
r Exergetic efficiency,
k =

E P,k
E D,k
=1
;
E F,k
E F,k

(15.10)

E D,k
.
E F,tot

(15.11)

r exergy-destruction ratio,
yk =

The exergetic efficiency of the overall system is

tot =

n
X
E P,tot
E L,tot
=1
yk
.
E F,tot
E F,tot
k=1

(15.12)

For the distinction between productive components, for which an exergetic efficiency is calculated, and dissipative components, for which no meaningful efficiency
can be defined, see [7].

15.3 A Compression Refrigeration Machine as an Example

381
TCD

condenser

Figure 15.1. Schematic of a compression

refrigeration machine.

throttling
valve

secondary
working fluid
secondary
working fluid

9
4

evaporator
TEV

compressor

The exergy concept complements and enhances an energetic analysis by calculating

1. the true thermodynamic value of an energy carrier,
2. the real thermodynamic inefficiencies in a system, and
3. variables that unambiguously characterize the performance of a system (kth
component or overall system) from the thermodynamic viewpoint.
The real thermodynamic inefficiencies in an energy-conversion system are
related to exergy destruction and exergy loss. All real processes are irreversible
because of effects such as chemical reaction, heat transfer through a finite temperature difference, mixing of matter at different compositions, temperatures and
pressure, unrestrained expansion, and friction. An exergy analysis identifies the system components with the highest thermodynamic inefficiencies and the processes
that cause them.

15.3 A Compression Refrigeration Machine as an Example

The simple vapor-compression refrigeration machine shown in Fig. 15.1 is used here
as an example for demonstrating the application of the methods discussed in this
chapter. This machine consists of a compressor and motor, (CM), a condenser (CD),
a throttling valve (TV), and an evaporator (EV). Ammonia is the primary working
fluid for the refrigeration machine, whereas water is used as the secondary working
fluid in the condenser, and air is the secondary working fluid in the evaporator.
The product from the overall system is the cold rate Q cold = 50 kW, the exergy rate
of which is kept constant in the analysis: E P,tot = E 9 E 8 = const. The isentropic
efficiency of the compressor is assumed to be CM = 0.85. For simplicity, pressure
drops are neglected in all heat exchangers.
Table 15.1 shows the material, mass flow rate, temperature, pressure, specific
enthalpy, specific entropy, and specific physical exergy of all streams of matter shown
in Fig. 15.1. The exergy destruction within each component of the refrigeration
machine is calculated with Eq. (15.8):
CM ( E 2 E 1 ), E D,CD = ( E 2 E 3 ) ( E 7 E 6 )
E D,CM = W
E D,EV = ( E 4 E 1 ) ( E 9 E 8 ),
M
M
T
T
E D,TV = ( E 3 E 4 ) ( E 4 E 3 ) = E 3 E 4 .

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Exergoeconomics and Exergoenvironmental Analysis

Table 15.1. Thermodynamic data for the vapor-compression refrigeration machine under real
operating conditions

Stream
1
2
3
4
W
0a
6 = 0a
7
8
9
0a
a

Material
stream

(kg/s)

T
( C)

p
(bars)

h
(kJ/kg)

s
(kJ/kg K)

ePH
(kJ/kg)

Ammonia
Ammonia
Ammonia
Ammonia

0.0454
0.0454
0.0454
0.0454

15
115
30
15

2.36
11.67
11.67
2.36

1444
1716
341.6
341.6

5.827
5.934
1.488
1.557

126.3
366.8
296.1
275.8

Ammonia
Water
Water
Air
Air
Air

2.98
2.98
9.94
9.94

1536
83.93
104.8
273.3
268.3
293.4

6.572
0.296
0.367
6.776
6.757
6.847

20
20
25
0
5
20

1
1
1
1
1
1

0
0
0.176
0.719
1.138
0

cPH
(/GJ)
66.69
66.43
66.30
71.35
27.78
0
580.6
0
84.73

0 is the reference point for calculating the exergy value of each material stream.

Table 15.2 shows the exergy rates associated with fuel, product, and exergydestruction as well as the exergetic efficiency and the exergy-destruction ratio for
each component and for the overall refrigeration machine. The results in Table 15.2
indicate that the condenser and the evaporator have the highest exergy-destruction
ratios and the lowest exergetic efficiencies. According to these results, the efforts to
improve the thermodynamic efficiency of the refrigeration machine should focus on
these two components.

15.4 Economic Analysis

The cost of the final products is one of the most important factors affecting the
selection of an option for the design or operation of an energy-conversion system.
The cost of a product is the amount of money paid to acquire or produce it. The
market price of a product is, in general, affected not only by the production cost of
the product and the desired profit but also by other factors, such as demand, supply,
competition, regulation, and subsidies. Exergoeconomics deals with costs.
The annual total revenue requirement (total product cost) for a system is the
revenue that must be collected in a given year through the sale of all products generated by this system to compensate the system operating company for all expenditures
Table 15.2. Conventional exergetic analysis for the vapor-compression
refrigeration machine
Component

E F,k (kW)

E P,k (kW)

E D,k (kW)

k (%)

yk (%)

CM
CD
TV
EV
Overall system

12.340
3.206
7.953
6.778
12.340

10.912
0.525
7.028
4.158
4.158

1.428
2.681
0.925
2.620
7.653

88.43
16.39
88.37
61.35
33.70

11.57
21.73
7.50
21.24
62.0