An aggregate price for energy services: Useful exergy as an intermediate flow in a two-sector model of the economy

Understanding the role of energy in economic growth has been particularly successful when measuring it as useful exergy with, however, the major shortcoming of treating this (intermediate) flow as a primary factor of production. Here, we solve this issue by conceptualizing the economy with an extended energy macro sector (E-Sector) encompassing all primary-to-final-to-useful exergy conversions, supplying useful exergy for consumption and as an intermediate to the remaining production processes, considered in the non-energy macro sector (NE-Sector). We develop a method for splitting national accounts into these two macro sectors and consider all energy-conversion devices as E-Sector capital. This allows us to obtain useful exergy prices, the first time such prices have been obtained consistently for all energy services in an economy, incorporating final-to-useful exergy efficiency, primary exergy supply, and costs of capital and labor used in energy conversion from the primary to the useful stage. As a case study, we consider Portugal (1960–2014), where aggregate useful exergy price declines throughout most of the period, stabilizing in recent years. Periods of decreasing useful exergy prices coincide with economic growth, supporting the strong relation between these two variables, without mistreating useful exergy as a primary factor of production.