Electricity — The Future

Publication Date01 January 1985
Pages6-9
DOIhttps://doi.org/10.1108/eb057387
AuthorPhilip Jones
SubjectEconomics,Information & knowledge management,Management science & operations
Electricity
The Future
by Philip Jones
Chairman, The Electricity Council
This article was first presented as a lecture delivered at
Horsley Towers Staff College of the Electricity Council,
24 October 1984 and is reprinted here by permission of
the Electricity Council.
Introduction
In talking about the future and I shall be talking about
the future for electricity in this country over the next 20 or
so years it is a great temptation to begin by taking a good
long look at the past, especially the recent past. The story
of the last decade is a familiar one and I will limit myself
to a very brief outline. We have seen two major oil price ex-
plosions in the world and generally slow economic growth.
Britain and other nations have had to adjust to these chang-
ed conditions, although in the UK we have been fortunate
in being able to develop our own supplies of oil and gas.
The UK energy market as a whole has fallen and not sur-
prisingly oil's share has contracted from about 49 per cent
to 41 per cent. Coal has declined from 21 per cent to 13
per cent. Both coal and oil have given way to the expan-
sion of gas which has increased its share from 18 per cent
to 32 per cent The proportion of electricity has risen from
12 per cent to 13½ per cent and this increased market share
has been won in the face of strong competition from gas.
Prospects and Uncertainties
What of the future? Clearly the costs of the fuels we use
and the growth of the economy are going to be key elements
in the development of this industry. Electricity sales will
con-
tinue to reflect growth in Gross Domestic Product in this
country and, indirectly through the nation's trade and other
connections, the performance of the American and other
economies abroad. Obviously no one can say for certain
what the future will be. This is why, for the Sizewell Inquiry,
we have carefully studied the prospects for economic ac-
tivity and fuel prices and set out the possibilities as we see
them.
Basically these cover the range from high to low, but
my purpose today is not to repeat the various Sizewell
estimates. Still less is it to try to say what will actually hap-
pen.
Instead what I would like to do is to look at some of
the world and UK conditions which the industry might be
facing until about the end of the century, and, recognising
the uncertainties, to pick out the areas of challenge and op-
portunity. What I have to say draws on parts of the Sizewell
range
In the world as a whole we are likely to continue to see
relatively low rates of economic growth impacting on the
UK economy. Developing countries such as South Korea or
Brazil will no doubt be advancing their industries as they
are now, and becoming increasingly strong in basic
manufactures steel, ships, cars and engineering products
generally. These were the take off points for the older in-
dustrial nations and have since become the staples of their
economies. Competition between the old and the newly
emerging industrial nations in these areas is already keen
and seems likely to intensify The new producers have all
the advantages of being last in the
field.
They are not
generally handicapped by high labour costs or by the weight
of their investment in old equipment. They can go for the
latest technology straight away. They face the old establish-
ed industries with the choice of getting on and modernis-
ing or getting out. We have already seen this happen in
textiles and shipbuilding and are now seeing it happen in
steelmaking and cars. In Western Europe, North America
and to a lesser extent even in Japan, capacity is either be-
ing removed or brought up to date. Inevitably this must mean
some transfer of traditional industry to the new producers.
The question is, what will the old producers put in its place?
The advanced economies, notably that of the United States,
are already in the process of change from old to new
technology to the so called high technology industries
electronics, computers and, above all, communications
Like the first industrial revolution which established tradi-
tional industries, these new developments offer the oppor-
tunity of achieving more in less time and with less effort.
This is bound to mean that people will have more leisure
time,
but the full transition to this state will not be achieved
without difficulty Enforced leisure in the form of high
unemployment has already been prevalent for some time,
and one of the challenges facing modern societies over the
next 20 years or so will undoubtedly be how to deploy free
time among their populations in a more socially acceptable
way.
Besides transferring to new industries, advanced countries
have also been placing increasing emphasis on services as
opposed to the production of goods. Since services mainly
involve the use of labour, this development has the advan-
tage of creating employment. Travel, the hotel trade and
catering as well as more mundane services such as bank-
ing,
hairdressing and dry cleaning have been growth areas
for a number of years but are capable of further expansion
if they can be used more frequently and even more widely.
The same is true of sport and other social activities.
Elsewhere, services mostly provided publicly in this coun-
try health, libraries, social welfare and recreational
facilities can expand in line with demand, given that
resources will be created to allow them to do so.
Here in Britain we can hardly fail to be subject to these in-
fluences as well as to those of the more familiar crisis areas
abroad.
The problems of the Middle East (the modern day
Balkans) and particularly those of oil seem unlikely to go
away in the foreseeable future. In the world generally,
political and social friction between rich and poor countries
and between rich and poor within countries will no doubt
continue
Production of North Sea oil is probably just about at its peak.
Until more exploration and development work has been
undertaken it is not clear to what extent and for how long
we shall have a surplus to sell abroad. The level of oil pro-
duction will have, just as it already does, a considerable im-
pact on our economy. To the extent that we no longer have
a surplus for export or become substantial net importers
6 IMDS JANUARY/FEBRUARY 1985

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