One outstanding feature of historical energy transitions is the change in the cost, power, and efficiency of the energy converters that humans used to perform useful work. These included animate energy converters such as people and draft animals, and inanimate energy converters such as water wheels, windmills, sailing ships, steam engines, internal combustion engines, and turbines powered by water, steam, and natural gas. Quantum leaps in the power output and efficiency of these devices erased longstanding constraints on the growth of populations and economies.
The energy historian Roger Fouquet described the important interplay between the technology and economics of the provision of power in over seven centuries in the United Kingdom.1 The discussion here is directly adapted from Fouquet’s work.
Like his work on lighting, heating, and transport, Fouquet quantified the price of the source of energy used to generate power and the price of the power service itself. Data constraints limited the analysis to draft animals, steam engines, and the generation of electricity.
Draft animals supplied the bulk of Britain’s power needs prior to the Industrial Revolution. The prices of horse provender (a combination of hay, oats, and peas) rose rapidly during the sixteenth century due to the increased crops required to feed the growing populations of humans and animals.
The price of power–the energy service itself—increased in the sixteenth century due the rising prices of horse provender and overall economic growth. The price of power then declined in the mid-seventeenth as improved horse breeding produced more powerful and efficient animals.
The price of energy to generate power declined in the nineteenth century when much cheaper coal replaced fodder. The cost of power from steam steadily declined in the nineteenth as the thermal efficiency of steam engines tripled.
In the first half of the twentieth century the price of energy fell faster than the price of the energy service. This period was characterized by the replacement of an expensive source (provender) with a cheaper option (coal) as the steam engine replaced the horse. In the second half of the twentieth century, this trend was reversed when more expensive energy sources (i.e., petroleum, then natural gas) were deployed for power generation. However, the electricity generated from oil and gas was cheaper.
The long run history of power in the United Kingdom illustrates an important lesson regarding the interpretation of energy transitions: energy services are a key indicator of the well-being impacts of energy. Changes in energy prices and energy sources are often the focus of analysis. But as the story of power in the United Kingdom demonstrates, other forces are at play. Improvements in the efficiency of energy converters, the higher quality of new sources, and the development of markets for new energy services combined to lower the price of energy services over the long haul, even when energy prices were rising. Dramatic declines in the cost of power occurred when both the price of energy was declining and the efficiency of conversion was increasing as evidenced by the first half of the 20th century.
1 Fouquet, Roger. “Divergences in Long-Run Trends in the Prices of Energy and Energy Services.” Review of Environmental Economics and Policy 5, no. 2 (July 2011): 196–218. https://doi.org/10.1093/reep/rer008.