Economic Aspects of Energy Storage

Abstract

To many, the subject of economics means cost comparison. Indeed, a thorough understanding of costs is the prerequisite to understanding other economic issues. However, economics extends beyond costs. There are historical, political, and cultural aspects of all economic issues; I do not intend to address these here. In addition, there is another fundamentally important aspect of economics. Economics is, or should be, a theory of economic activity. The most outstanding feature of economic activity, since about the end of the 14th century, has been rapid, incessant change: change in the techniques of production, accompanied by consequent change in economic and political institutions and in the everyday lives of all human beings. Economic theory, as it now stands, can deal pretty well with trade. However, economics is weak in its capacities to deal with technical change. Indeed it was only recently that the Nobel committee awarded the prize to Robert Solow for his pioneering work showing the importance of technical change in the growth of economic output and productivity.