ECOS 2026: Prof. Tsatsaronis, the need to address economics from the engineering perspective has a long tradition because, it was a need to make proper estimations of costs in terms of investments and operation of large technological facilities. What was in your opinion, the crucial point when thermoeconomics became a scientific research field?
G.T.:
Engineers should always familiarize themselves with principles of economics. I feel very strongly about that. It is much easier for engineers to learn principles of economics than for economists to become familiar with engineering principles. Important decisions regarding the optimization of the design and operation of energy systems should be made by persons who are well familiar with both the engineering and the economic aspects of the systems – that is by expert engineers, with a solid understanding of economic issues. Unfortunately, we have too many examples in the past of wrong decisions in energy engineering that were taken by persons or groups who did not fulfil this condition (e.g., did not understand thermodynamics).
Engineering is based on physical laws, whereas economics is based on man-made laws. In economics, contrary to engineering, the same conditions do not always lead to the same result. Therefore, the different degrees of perfection lead us to consider a deviation of 2% between prediction and real value in the thermodynamic performance of an energy system as bad, whereas a cost prediction that deviated by 10% from the real value might be considered as excellent.
Exergoeconomics (we should not use the term “thermoeconomics” any more after it has been misused so often) appropriately combines an exergetic analysis with an economic one. The crucial point when exergoeconomics was introduced was (and still is today) the cost estimation, that is the estimation of the investment cost for a new investment that will be realized say in the next 5 years and the estimation of the required fuel cost in the future 10-20 years. The latter cannot be accurately estimated by any means available to us today. However, decisions should be based on these costs, which should be estimated using the best available tools and common sense.
ECOS 2026: The interaction with the economical sphere had a very important influence on the engineering way of thinking. But, what was in your opinion, the influence of engineering on economics?
G.T.:
Let us first state the obvious: Thanks to achievements in engineering and material sciences, renewable energies became very cost competitive. Engineering helped in many cases to reduce the cost at which energy services are offered.
Moreover, exergoeconomics applied to novel energy systems identified some unfavorable economic decisions made in the past. It showed to economists that before deciding about future systems, they need to consult thermodynamics and to consider some technical options that might not be obvious. In some cases the economics of a technical option can be improved by relatively small changes. In some cases I would say engineering brought more common sense to economic considerations.
We should not forget that energy engineering and economics are strongly interlinked with politics, with decarbonization, and, in general, with efforts to reduce the overall environmental impact of energy systems. Here the synergies among all these areas that should be used to develop meaningful energy strategies have not always been used. Let us consider, for example the Green Deal of the European Union that emphasizes the use of hydrogen for decarbonization purposes, although expert engineers have known for a long time that this is not the most effective option from the viewpoints of thermodynamics and economics for achieving decarbonization. Policy makers, in addition to economists, should listen more to engineers.
ECOS 2026: Bringing together the engineering and economical perspectives in an unified approach based on exergy, was a very important moment in science and it took the advantage of existing or emerging sophisticated mathematical models for analyses and optimization. Did we explore all the opportunities offered by this approach?
G.T.:
We have not yet explored all opportunities, because we had relatively few applications to real world systems. The large majority of applications has been in academic examples, that is in systems that will never be realized, at least not in the studied form. On the other side, the confidentiality of company data and the mistrust of company managers to academic approaches (particularly when the managers are not familiar with these approaches) has always been a big impediment to exploring all opportunities presented by exergoeconomics. I would like to mention that almost all progress made in this area by my coworkers and me has been made while we were working on industrial projects and we needed to answer specific questions. I hope the young engineers working in exergoeconomics in future industrial projects will further develop these approaches.
Now, when we talk about a unified approach, we should not restrict it to engineering and economics. By combining an exergetic analysis with a life-cycle assessment, we developed the exergoenvironmental analysis. Finally by splitting the inefficiencies, costs and environmental impacts into avoidable, unavoidable, endogenous and exogenous parts and by combining these parts we developed the advanced methods. All these methods, known as conventional and advanced “exergy-based methods” represent a unified approach for evaluating a system simultaneously and consistently (that is in a unified way) from the thermodynamic, economic, and environmental viewpoints.
ECOS 2026: Data driven approaches are reshaping now the business models and the so called microeconomics. What kind of impact are you expecting from the engineering side?
G.T.:
There is no doubt that data-driven approaches will play a significant role in the future in all areas of energy engineering. The simulation, analysis, and improvement of energy systems will profit from that. The evaluation criteria used in the exergy-based methods will always be valid. However, data-driven approaches might assist us also in further improving the quality of the exergy-based methods in the future.
ECOS 2026: Would you be so kind to reveal what is going to be the topic of your keynote speech at ECOS 2026, to be held in Constanta, Romania?
G.T.:
In my presentation I would like to discuss some insights from the field of energy engineering, some key takeaways from energy projects and some lessons we learned since the first energy crisis 52 years ago. Hopefully we will learn from the past and make fewer mistakes in the future.