A strong argument for using non-commodities to generate electricity

- We used an optimal control approach to analyze the trade-off between the multiple uses of energy resource.
- We used a dynamic model which establishes relationships between economic growth, the fossil fuel, water and biomass sectors.
- The analysis establishes that the price of commodities for non-energy uses should be twice the price of the energy assets.

An optimal control approach towards generating electricity is used to analyze the trade-off between using of primary sources which are regarded as commodities, such as fossil fuels, biomass and water to generate electricity, and exploiting these sources for their other economic uses (for example, in the petrochemical industry, in the production of fuels, in agriculture, in steelmaking, and so forth). In order to do so, a dynamic model is presented which establishes relationships between economic growth, the fossil fuel, water and biomass sectors, and energy policies, based on the application of the Pontryagin Maximum Principle. Among other results, the analysis establishes that, under the optimal path, the price of commodities for non-energy uses should be twice the price of the energy assets. This indicates that sources which are not commodities such as solar energy, wind energy, and geothermal energy, should be used to generate electricity.