The exergy method has been used to analyse changes in the structure of the
UK energy system over a period of more than 30 years from 1965. A sectoral
approach was employed, with the supply side examined in terms of the main e
nergy sources, while final demand was separated into four energy end-use gr
oups: the domestic, service, industrial and transport sectors. Estimates of
sector-weighted or 'lumped' parameters, such as exergy efficiencies, were
obtained from the particular characteristics of each sector. These were emp
loyed to determine the exergetic 'improvement potential' for critical eleme
nts of the energy system. Electricity generation together with final energy
demand in the domestic sector and in transport are shown to account for ne
arly 80 per cent of the Second Law improvement potential. This poor thermod
ynamic performance is principally due to exergy losses in combustion and he
at transfer processes associated with power generation, space heating and m
ain transport modes. The results of the exergy analysis are placed in the c
ontext of recent developments in energy market liberalization and of the ne
ed to achieve environmental sustainability. They are also contrasted with p
roposals for new or improved energy technologies to meet the requirements o
f a sustainable energy strategy. Finally, the role of the exergy method is
contrasted with the various other approaches to energy technology assessmen
t.