The Role of Electricity in Industrial Development

This paper examines the role played by electricity in the course of industrial development over the past century. The focus is primarily on the American experience. It is commonly observed that industrialization involves increasing energy intensity, but this is not entirely accurate. In the American experience, energy intensity (measured as the ratio of total energy consumption to GNP) rose between 1880 and 1920, but declined thereafter. However, throughout the entire 20th century, electricity's share of total energy consumption has increased. The paper accounts for this rising share in terms of certain unique features of electricity in specific industrial applications, i.e., features for which other energy forms are, at best, highly imperfect substitutes.