Abstract
In the empirical research, the unit cost optimum and net energy are key concepts for understanding the design of nearly zero-energy buildings (nZEBs) process. Some uses of these concepts are unclear and different to main meaning. In this research, we shape unit cost curve to generate an analytical tool to notice the amplitude of saving potential of matter and energy. This potential is evaluated between the two economic optima: unit cost and maximum profit. The inferred inequality between the produced quantity and inverse elasticity of profit enables one to notice the relative position of the two optima. This new tool gives us the terms of total profit increase for a short or a large interval on the capacity axis and it deals with different sizes of prices and costs. Simultaneously, the requirement of maximizing the total profit of private companies is met. This new tool sustains the policy makers to harmonize the interests of both players, entrepreneurs, and human communities. When using this tool on some stylized facts, it is inferred that under the circumstances of large quantities and low prices—in energetic sector electricity production based on coal, for instance—, these main optima overlap or are adjacent. The closeness of these two optima, supported through different economic measures, provides both profit maximization and saving resources, in order to maintain the reliability of economic processes. In addition, we make some remarks about net energy and the necessity to separate the static optimum from dynamic optimum of nZEB processes.
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Notes
- 1.
The researchers consider the analytical points of two optima on the capacity axis and the profit maximization is examined on the unit cost curve with U-shapes by discrete measurement or deriving the function of total or unit cost curve.
- 2.
For someone not deeply involved in economics, it is about maximization of total profit.
- 3.
The fact that sometimes this margin is high, at least for products manufactured in small and medium quantities, do not deny the validity of the average calculation algorithm for market price. For unique or small-series products with high price, the making rule may be considered different if every copy is negotiated separately. In other cases, the entrepreneur comes back to an average calculation, even for small amounts, if the agreement or conditions of sale and negotiation do not require differentiated price. Even if costs can vary continuously around the average, using the average cost it allows stability of sales on market due to price, at least for a while, and the buyers are accustomed to a stable price.
- 4.
Using Microsoft Excel or other similar software, we could easily identify a regression function, directly on the graph, taking into account the degrees of freedom and R2 coefficient.
- 5.
Paradoxically, although in economic analysis the perspective was and is the maximization of profit, in the case of concave curve between the two optima, it is discussed about decreasing returns, although on this interval the total profit increases.
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Acknowledgements
The author would like to thank Prof. Sudhakara Reddy, for his suggestions on the reformulation of some ideas, Kozo Mayumi for his advice on dimensional inconsistency, and a participant at IGIDR AES workshop, 24–25 October 2012, who sought clarification on average cost pricing method.
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Dogaru, V. (2015). Some Arguments for an Integrated Tool in Economic and Energy Valuation. In: Reddy, B., Ulgiati, S. (eds) Energy Security and Development. Springer, New Delhi. https://doi.org/10.1007/978-81-322-2065-7_24
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DOI: https://doi.org/10.1007/978-81-322-2065-7_24
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