Frédéric Gilles Sourgens, James McCulloch Chair in Energy Law & Faculty Director, Tulane Energy Law & Policy Center
History is critical to the evaluation of contemporary energy policy choices. The choices we made in the past tend to limit our policy options today. They also can serve as natural experiments to assess the results of current policy proposals. This is nothing new for energy professionals. For example, the energy historian Daniel Yergin is master of ceremonies for CERA Week, one of the most important energy events of the year. In this week’s book section, I would like to highlight an academic energy history classic that deserves a new audience not for its academic tone but for its academic rigor and analytical approach. Think of it as the electricity sibling to Yergin’s famous history of the world petroleum business, The Prize, which earned him the Pulitzer Prize for non-fiction in 1992 These two books should keep each other good company on any energy bookshelf overflowing with business books, technical reports, and recent policy pitches.
The book I recommend to you this week is Thomas P. Hughes’ Networks of Power, Electrification in Western Society, 1880-1930. Both book and author are classics. Networks of Power was published in 1983, and its author received the Leonardo da Vinci Medal of the Society for the History of Technology in 1985. Networks of Power does exactly what the subtitle presages; it provides a insightful techno-commercial history of how electricity came to take center stage in our energy lives in the latter part of the 19th and the early part of the 20th Century.
What makes Networks of Power so valuable is the analytic framework it illuminates for problem-solving. Hughes not only narrates history. He explains and contextualizes it. He shows how energy innovation caught fire in these early days of electrification and which policy frameworks helped to nurture and expand innovation, and which actually served to impede or retard it. These are valuable lessons for us today as we are again in the middle of an energy transition and our very own battle or sets of battle over the systems involving hard-to compare technologies as disparate as renewables, fossil fuels, electrification, and carbon capture. Three basic themes run through Hughes’ book that merit our particular attention.
First, Hughes shows that only a systemic that is focused on solving all the critical energy problems holding back the energy system as a whole, can hope to find commercial success. Innovation is good, but innovation that loses sight of the big picture will not catch fire until it is combined systemically into an overall approach that can supply the greatest amount of energy to the greatest number of people at a best possible price without sacrificing security and reliability. Hughes masterfully combines technical expertise and commercial acumen to the explanation of underlying engineering problems that faced electrification, and why those problems could only be solved when they were put together into a complete systemic vision by innovator businessmen who knew how to combine engineering solutions to serve a broader demands of a dynamically changing market. This focus drives him reappraise traditional villains in many popular histories like Chicago’s Sam Insull (the target of New Deal energy rhetoric and policy). Hughes shows how Insull’s technical understanding of larger, more powerful generators combined with his commercial sense in balancing electricity loads to pay for them gave us America’s first electricity boomtown in Chicago. Though Insull drove size and power too far in the end, Hughes shows how even these decisions made sense in their own early context and that they gave us the seeds from which to grow America’s modern electricity system by proving the tremendous commercial potential generation done right could profitably unlock.
The second important theme in Networks of Power is Hughes’ careful work on the universal system. Hughes shows how at every stage of electrification, it only became possible to unlock new commercial potential when a new paradigm could show how it would play together with existing policy choices. This was certainly true in the first round of electricity for lighting systems. These had to contend with the fact that many cities had recently invested in gas lighting, exposing them to huge exposure to sunk costs if forced to make fundamental shifts in infrastructure. The same was true later in the epic ‘battle of the systems’ between direct and alternating current, which was portrayed simplistically and personally in the popular press as a battle between Edison and Tesla. Hughes shows that the historical reality was instead far more nuanced. In fact, he documents that in the end the problem was resolved not by victory, but through implementation of a universal polyphase alternating current system that incorporated existing direct current infrastructure and thus limited the looming sunk cost problems for cities that had already invested heavily in direct current infrastructure. Hughes thus provides a helpful analogue for our own time that shows that a battle of the systems between renewables and incumbents is unlikely to end with the victory of one over the other. Rather, it is only when we develop a universal system that combines both that we are likely to find a stable new paradigm. Hughes wrote this lesson at a time when our current policy challenges would have been unimaginable for an energy historian. He thus comes at the problem with a helpfully unbiased historical and analytical perspective we would do well to take to heart.
The third theme in Networks of Power is that effective energy policymaking is a critical to energy leadership. Hughes draws a startling comparison between pre-World War I Berlin and London. The typical tropes of such comparisons are to cast London as the shining example of industrial leadership and democratic governance and Berlin as the backwater of autocratic crony corporatism. Hughes shows that in the electricity context, exactly the opposite was the case: Berlin was the leading example and London the outlier. Berlin managed to bring capital, industry, and democratically elected leadership into a shared bargain that extended energy access, supported electrification, and made Berlin the European capital of a new, socially-conscious electrification. The key to Berlin’s success was precisely that politics supported business while business provided increasingly more available services that improved the general welfare and economic activity of the city. London missed this opportunity. The difference Hughes shows is staggering – Berlin was years ahead of London and would have continued its progress had coal deposits not been required to support the armaments industry for the war effort. World War I halted Berlin’s momentum and broke the compact between politics, capital, and industry: it was the catalyst for the city to take private electricity service public (against compensation, of course). With that, one of the most successful public-private partnerships in the electrification of the Western world ended abruptly. Hughes shows, therefore, the mechanics and fragility of policy support for the electricity sector. Given the current geopolitical volatility and domestic policy upheavals around the world, one would do well to consider his careful study, in the 21st Century as well.
Hughes richly deserves a new audience. The problem he describes is a problem that has increased relevance for us today. His careful techno-commercial eye and keen insights will be of great benefit to us as we face our own choices. Hughes’ deep analytical understanding of the overlap between good policy and publicly beneficial business in a developing and dynamic new market can and should guide us in our policymaking today.
