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The electric power industry covers the
generation A generation is all of the people born and living at about the same time, regarded collectively. It also is "the average period, generally considered to be about 20–⁠30 years, during which children are born and grow up, become adults, and b ...
,
transmission Transmission or transmit may refer to: Science and technology * Power transmission ** Electric power transmission ** Transmission (mechanical device), technology that allows controlled application of power *** Automatic transmission *** Manual tra ...
,
distribution Distribution may refer to: Mathematics *Distribution (mathematics), generalized functions used to formulate solutions of partial differential equations *Probability distribution, the probability of a particular value or value range of a varia ...
and sale of
electric power Electric power is the rate of transfer of electrical energy within a electric circuit, circuit. Its SI unit is the watt, the general unit of power (physics), power, defined as one joule per second. Standard prefixes apply to watts as with oth ...
to the general public and industry. The commercial distribution of electric power started in 1882 when electricity was produced for
electric lighting Electric light Electric light is an artificial light source powered by electricity. Electric Light may also refer to: * Light fixture, a decorative enclosure for an electric light source * Electric Light (album), ''Electric Light'' (album), a 201 ...
. In the 1880s and 1890s, growing economic and safety concerns lead to the regulation of the industry. What was once an expensive novelty limited to the most densely populated areas, reliable and economical electric power has become an essential aspect for normal operation of all elements of developed economies. By the middle of the 20th century, electricity was seen as a "
natural monopoly A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming adv ...
", only efficient if a restricted number of organizations participated in the market; in some areas, vertically integrated companies provide all stages from generation to retail, and only governmental supervision regulated the rate of return and cost structure. Since the 1990s, many regions have broken up the generation and distribution of electric power. While such markets can be abusively manipulated with consequent adverse price and reliability impact to consumers, generally competitive production of electrical energy leads to worthwhile improvements in efficiency. However, transmission and distribution are harder problems since returns on investment are not as easy to find.


History

Although electricity had been known to be produced as a result of the chemical reactions that take place in an
electrolytic cell An electrolytic cell is an electrochemical cell that utilizes an external source of electrical energy to force a chemical reaction that would otherwise not occur. The external energy source is a voltage applied between the cell's two electrodes; ...
since
Alessandro Volta Alessandro Giuseppe Antonio Anastasio Volta (, ; ; 18 February 1745 – 5 March 1827) was an Italian chemist and physicist who was a pioneer of electricity and Power (physics), power, and is credited as the inventor of the electric battery a ...
developed the
voltaic pile upright=1.2, Schematic diagram of a copper–zinc voltaic pile. Each copper–zinc pair had a spacer in the middle, made of cardboard or felt soaked in salt water (the electrolyte). Volta's original piles contained an additional zinc disk at the ...
in 1800, its production by this means was, and still is, expensive. In 1831,
Michael Faraday Michael Faraday (; 22 September 1791 – 25 August 1867) was an English chemist and physicist who contributed to the study of electrochemistry and electromagnetism. His main discoveries include the principles underlying electromagnetic inducti ...
devised a machine that generated electricity from rotary motion, but it took almost 50 years for the technology to reach a commercially viable stage. In 1878, in the
United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
,
Thomas Edison Thomas Alva Edison (February11, 1847October18, 1931) was an American inventor and businessman. He developed many devices in fields such as electric power generation, mass communication, sound recording, and motion pictures. These inventions, ...
developed and sold a commercially viable replacement for gas lighting and heating using locally generated and distributed
direct current Direct current (DC) is one-directional electric current, flow of electric charge. An electrochemical cell is a prime example of DC power. Direct current may flow through a conductor (material), conductor such as a wire, but can also flow throug ...
electricity. Robert Hammond, in December 1881, demonstrated the new electric light in the
Sussex Sussex (Help:IPA/English, /ˈsʌsɪks/; from the Old English ''Sūþseaxe''; lit. 'South Saxons'; 'Sussex') is an area within South East England that was historically a kingdom of Sussex, kingdom and, later, a Historic counties of England, ...
town of
Brighton Brighton ( ) is a seaside resort in the city status in the United Kingdom, city of Brighton and Hove, East Sussex, England, south of London. Archaeological evidence of settlement in the area dates back to the Bronze Age Britain, Bronze Age, R ...
in the UK for a trial period. The ensuing success of this installation enabled Hammond to put this venture on both a commercial and legal footing, as a number of shop owners wanted to use the new electric light. Thus the Hammond Electricity Supply Co. was launched. In early 1882, Edison opened the world's first steam-powered electricity generating station at
Holborn Viaduct Holborn Viaduct is a road bridge in London and the name of the street which crosses it (which forms part of the A40 road, A40 route). It links Holborn, via Holborn Circus, with Newgate Street, in the City of London, England financial distri ...
in
London London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...
, where he had entered into an agreement with the City Corporation for a period of three months to provide street lighting. In time he had supplied a number of local consumers with electric light. The method of supply was direct current (DC). Whilst the Godalming and the 1882 Holborn Viaduct Scheme closed after a few years the Brighton Scheme continued on, and supply was in 1887 made available for 24 hours per day. It was later on in the year in September 1882 that Edison opened the
Pearl Street Power Station Pearl Street Station was Thomas Edison's first commercial power plant in the United States. It was located at 255–257 Pearl Street in the Financial District of Manhattan in New York City, just south of Fulton Street on a site measuring . The s ...
in
New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...
and again it was a DC supply. It was for this reason that the generation was close to or on the consumer's premises as Edison had no means of voltage conversion. The voltage chosen for any electrical system is a compromise. For a given amount of power transmitted, increasing the
voltage Voltage, also known as (electrical) potential difference, electric pressure, or electric tension, is the difference in electric potential between two points. In a Electrostatics, static electric field, it corresponds to the Work (electrical), ...
reduces the
current Currents, Current or The Current may refer to: Science and technology * Current (fluid), the flow of a liquid or a gas ** Air current, a flow of air ** Ocean current, a current in the ocean *** Rip current, a kind of water current ** Current (hydr ...
and therefore reduces the required wire thickness. Unfortunately it also increases the danger from direct contact and increases the required insulation thickness. Furthermore, some load types were difficult or impossible to make work with higher voltages. The overall effect was that Edison's system required power stations to be within a mile of the consumers. While this could work in city centres, it would be unable to economically supply suburbs with power. Shock and Awe: The Story of Electricity – 2. The Age of Invention The mid to late 1880s saw the introduction of
alternating current Alternating current (AC) is an electric current that periodically reverses direction and changes its magnitude continuously with time, in contrast to direct current (DC), which flows only in one direction. Alternating current is the form in w ...
(AC) systems in Europe and the U.S. AC power had an advantage in that
transformer In electrical engineering, a transformer is a passive component that transfers electrical energy from one electrical circuit to another circuit, or multiple Electrical network, circuits. A varying current in any coil of the transformer produces ...
s, installed at
power station A power station, also referred to as a power plant and sometimes generating station or generating plant, is an industrial facility for the electricity generation, generation of electric power. Power stations are generally connected to an electr ...
s, could be used to raise the voltage from the generators, and transformers at local substations could reduce voltage to supply loads. Increasing the voltage reduced the current in the transmission and distribution lines and hence the size of conductors and distribution losses. This made it more economical to distribute power over long distances. Generators (such as
hydroelectric Hydroelectricity, or hydroelectric power, is Electricity generation, electricity generated from hydropower (water power). Hydropower supplies 15% of the world's electricity, almost 4,210 TWh in 2023, which is more than all other Renewable energ ...
sites) could be located far from the loads. AC and DC competed for a while, during a period called the
war of the currents The war of the currents was a series of events surrounding the introduction of competing electric power transmission systems in the late 1880s and early 1890s. It grew out of two lighting systems developed in the late 1870s and early 1880s: arc l ...
. The DC system was able to claim slightly greater safety, but this difference was not great enough to overwhelm the enormous technical and economic advantages of alternating current which eventually won out. The AC power system used today developed rapidly, backed by industrialists such as
George Westinghouse George Westinghouse Jr. (October 6, 1846 – March 12, 1914) was a prolific American inventor, engineer, and entrepreneurial industrialist based in Pittsburgh, Pennsylvania. He is best known for his creation of the railway air brake and for bei ...
with
Mikhail Dolivo-Dobrovolsky Mikhail Osipovich Dolivo-Dobrovolsky (; or ''Michail Ossipowitsch Doliwo-Dobrowolski''; – ) was a Russian-born engineer, electrician, and inventor of Polish-Russian origins, active in the German Empire and also in Switzerland. After study ...
,
Galileo Ferraris Galileo Ferraris (31 October 1847 – 7 February 1897) was an Italian university professor, physicist and electrical engineer, one of the pioneers of AC power system and inventor of the induction motor although he never patented his work. Many ne ...
,
Sebastian Ziani de Ferranti Sebastian Pietro Innocenzo Adhemar Ziani de Ferranti (9 April 1864 – 13 January 1930) was a British electrical engineer and inventor who pioneered high-voltage AC power in the UK, patented the Ferranti dynamo and designed Deptford power stat ...
,
Lucien Gaulard Lucien Gaulard (16 July 1850 – 26 November 1888) was a French engineer who invented devices for the transmission of alternating current electrical energy. Biography Gaulard was born in Paris, France in 1850. A power transformer developed by G ...
, John Dixon Gibbs,
Carl Wilhelm Siemens Sir Carl Wilhelm Siemens (4 April 1823 – 19 November 1883), anglicised to Charles William Siemens, was a German-British electrical engineer and businessman. autobiography Sir Carl Wilhelm Siemens FRS FRSA, anglicised to Charles William Sie ...
, William Stanley Jr.,
Nikola Tesla Nikola Tesla (;"Tesla"
. ''Random House Webster's Unabridged Dictionary''.
; 10 July 1856 – 7 ...
, and others contributed to this field.
Power electronics Power electronics is the application of electronics to the control and conversion of electric power. The first high-power electronic devices were made using mercury-arc valves. In modern systems, the conversion is performed with semiconduct ...
is the application of
solid-state electronics Solid-state electronics are semiconductor electronics: electronic equipment that use semiconductor devices such as transistors, diodes and integrated circuits (ICs). The term is also used as an adjective for devices in which semiconductor elec ...
to the control and conversion of electric power. Power electronics started with the development of the
mercury arc rectifier A mercury-arc valve or mercury-vapor rectifier or (UK) mercury-arc rectifier is a type of electrical rectifier used for converting high-voltage or high-Electric current, current alternating current (AC) into direct current (DC). It is a type of c ...
in 1902, used to convert AC into DC. From the 1920s on, research continued on applying
thyratron A thyratron is a type of gas-filled tube used as a high-power electrical switch and controlled rectifier. Thyratrons can handle much greater currents than similar hard-vacuum tubes. Electron multiplication occurs when the gas becomes ionized, pro ...
s and grid-controlled mercury arc valves to power transmission. Grading electrodes made them suitable for
high voltage direct current A high-voltage direct current (HVDC) electric power transmission system uses direct current (DC) for electric power transmission, in contrast with the more common alternating current (AC) transmission systems. Most HVDC links use voltages betwe ...
(HVDC) power transmission. In 1933, selenium rectifiers were invented.
Transistor A transistor is a semiconductor device used to Electronic amplifier, amplify or electronic switch, switch electrical signals and electric power, power. It is one of the basic building blocks of modern electronics. It is composed of semicondu ...
technology dates back to 1947, with the invention of the
point-contact transistor The point-contact transistor was the first type of transistor to be successfully demonstrated. It was developed by research scientists John Bardeen and Walter Brattain at Bell Laboratories in December 1947. They worked in a group led by phys ...
, which was followed by the
bipolar junction transistor A bipolar junction transistor (BJT) is a type of transistor that uses both electrons and electron holes as charge carriers. In contrast, a unipolar transistor, such as a field-effect transistor (FET), uses only one kind of charge carrier. A ...
(BJT) in 1948. By the 1950s, higher power semiconductor
diode A diode is a two-Terminal (electronics), terminal electronic component that conducts electric current primarily in One-way traffic, one direction (asymmetric electrical conductance, conductance). It has low (ideally zero) Electrical resistance ...
s became available and started replacing
vacuum tube A vacuum tube, electron tube, thermionic valve (British usage), or tube (North America) is a device that controls electric current flow in a high vacuum between electrodes to which an electric voltage, potential difference has been applied. It ...
s. In 1956, the
silicon controlled rectifier A silicon controlled rectifier or semiconductor controlled rectifier (SCR) is a four-layer solid-state current-controlling device. The name "silicon controlled rectifier" is General Electric's trade name for a type of thyristor. The principle ...
(SCR) was introduced, increasing the range of power electronic applications. A breakthrough in power electronics came with the invention of the
MOSFET upright=1.3, Two power MOSFETs in amperes">A in the ''on'' state, dissipating up to about 100 watt">W and controlling a load of over 2000 W. A matchstick is pictured for scale. In electronics, the metal–oxide–semiconductor field- ...
(metal-oxide-semiconductor field-effect transistor) in 1959. Generations of MOSFETs enabled power designers to achieve performance and density levels not possible with bipolar transistors. In 1969,
Hitachi () is a Japanese Multinational corporation, multinational Conglomerate (company), conglomerate founded in 1910 and headquartered in Chiyoda, Tokyo. The company is active in various industries, including digital systems, power and renewable ener ...
introduced the first vertical
power MOSFET A power MOSFET is a specific type of metal–oxide–semiconductor field-effect transistor (MOSFET) designed to handle significant power levels. Compared to the other power semiconductor devices, such as an insulated-gate bipolar transistor (IG ...
, which would later be known as the
VMOS A VMOS () (vertical metal oxide semiconductor or V-groove MOS) transistor is a type of metal–oxide–semiconductor field-effect transistor (MOSFET). VMOS is also used to describe the V-groove shape vertically cut into the substrate material. ...
(V-groove MOSFET). The power MOSFET has since become the most common
power device A power semiconductor device is a semiconductor device used as a switch or rectifier in power electronics (for example in a switch-mode power supply). Such a device is also called a power device or, when used in an integrated circuit, a power IC. ...
in the world, due to its low gate drive power, fast switching speed, easy advanced paralleling capability, wide
bandwidth Bandwidth commonly refers to: * Bandwidth (signal processing) or ''analog bandwidth'', ''frequency bandwidth'', or ''radio bandwidth'', a measure of the width of a frequency range * Bandwidth (computing), the rate of data transfer, bit rate or thr ...
, ruggedness, easy drive, simple biasing, ease of application, and ease of repair. While HVDC is increasingly being used to transmit large quantities of electricity over long distances or to connect adjacent
asynchronous Asynchrony is any dynamic far from synchronization. If and as parts of an asynchronous system become more synchronized, those parts or even the whole system can be said to be in sync. Asynchrony or asynchronous may refer to: Electronics and com ...
power systems, the bulk of electricity generation, transmission, distribution and retailing takes place using alternating current.


Organization

The electric power industry is commonly split up into four processes. These are
electricity generation Electricity generation is the process of generating electric power from sources of primary energy. For electric utility, utilities in the electric power industry, it is the stage prior to its Electricity delivery, delivery (Electric power transm ...
such as a
power station A power station, also referred to as a power plant and sometimes generating station or generating plant, is an industrial facility for the electricity generation, generation of electric power. Power stations are generally connected to an electr ...
,
electric power transmission Electric power transmission is the bulk movement of electrical energy from a generating site, such as a power plant, to an electrical substation. The interconnected lines that facilitate this movement form a ''transmission network''. This is ...
,
electricity distribution Electric power distribution is the final stage in the delivery of electricity. Electricity is carried from the transmission system to individual consumers. Distribution substations connect to the transmission system and lower the transmission ...
and
electricity retailing Electricity retailing is the final sale of electricity from electricity generation, generation to the end-use consumer. This is the fourth major step in the electricity delivery process, which also includes electricity generation, generation, elec ...
. In many countries, electric power companies own the whole infrastructure from generating stations to transmission and distribution infrastructure. For this reason, electric power is viewed as a
natural monopoly A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming adv ...
. The industry is generally heavily
regulated Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. Fo ...
, often with
price control Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of go ...
s and is frequently government-owned and operated. However, the modern trend has been growing deregulation in at least the latter two processes. The nature and state of market reform of the
electricity market An electricity market is a system that enables the exchange of electrical energy, through an electrical grid. Historically, electricity has been primarily sold by companies that operate electric generators, and purchased by consumers or electr ...
often determines whether electric companies are able to be involved in just some of these processes without having to own the entire infrastructure, or citizens choose which components of infrastructure to patronise. In countries where electricity provision is deregulated, end-users of electricity may opt for more costly green electricity.


Generation

Generation is the conversion of some primary energy source into electric power suitable for commercial use on an electrical grid. Most commercial electric power is produced by rotating electrical machines, " generators", which move conductors through a magnetic field to produce electric current. The generator is rotated by some other prime mover machine; in typical grid-connected generators this is a steam turbine, a gas turbine, or a hydraulic turbine. Primary energy sources for these machine are often fossil fuels (coal, oil, natural gas), nuclear fission, geothermal steam, or falling water. Renewable sources such as wind and solar energy are increasingly of commercial importance. Since electrical generation must be closely matched with electrical consumption, enough generation capacity must be installed to meet peak demands. At the same time, primary energy sources must be selected to minimize the cost of produced electrical energy. Generally the lowest-incremental-cost source of electrical energy will be the next unit connected to meet rising demand. Electrical generators have automatic controls to regulate the power fed into the electrical transmission system, adjusting generator output moment by moment to balance with electrical demand. For a large grid with scores or hundreds of generators connected and thousands of loads, management of stable generator supply is a problem with significant challenges, to meet economic, environmental and reliability requirements. For example, low-incremental-cost generation sources such as nuclear power plants may be run continually to meet the average "
base load The base load (also baseload) is the minimum level of demand on an electrical grid over a span of time, for example, one week. This demand can be met by unvarying power plants or dispatchable generation, depending on which approach has the best m ...
" of the connected system, whereas more costly
peaking power plant Peaking power plants, also known as peaker plants, and occasionally just "peakers", are power plants that generally run only when there is a high demand, known as peak demand, for electricity. Because they supply power only occasionally, the powe ...
s such as natural gas turbines may be run for brief times during the day to meet peak loads. Alternatively,
load management Load management, also known as demand-side management (DSM), is the process of Load balancing (electrical power), balancing the supply of electricity on the network with the electrical load by adjusting or controlling the load rather than the pow ...
strategies may encourage more even demand for electrical power and reduce costly peaks. Designated generator units for a particular electrical grid may be run at partial output only, to provide "spinning reserve" for sudden increases in demand or faults with other generating units. In addition to electrical power production, electrical generation units may provide other
ancillary services Ancillary services are the services necessary to support the transmission of electric power from power plant, generators to consumers given the obligations of control areas and transmission utilities within those control areas to maintain reliable ...
to the electrical grid, such as frequency control, reactive power, and
black start A black start is the process of restoring an electric power station, a part of an electric grid or an industrial plant, to operation without relying on the external transmission network, electric power transmission network to recover from a tota ...
of a collapsed power grid. These ancillary services may be commercially valuable when the generation, transmission, and distribution electrical companies are separate commercial entities.


Electric power transmission

Electric power transmission is the bulk movement of
electrical energy Electrical energy is the energy transferred as electric charges move between points with different electric potential, that is, as they move across a voltage, potential difference. As electric potential is lost or gained, work is done changing the ...
from a generating site, such as a
power plant A power station, also referred to as a power plant and sometimes generating station or generating plant, is an industrial facility for the electricity generation, generation of electric power. Power stations are generally connected to an electr ...
, to an
electrical substation A substation is a part of an electrical generation, transmission, and distribution system. Substations transform voltage from high to low, or the reverse, or perform any of several other important functions. Between the generating station an ...
. The interconnected lines which facilitate this movement are known as a transmission network. This is distinct from the local wiring between high-voltage substations and customers, which is typically referred to as
electric power distribution Electric power distribution is the final stage in the Power delivery, delivery of electricity. Electricity is carried from the Electric power transmission, transmission system to individual consumers. Distribution Electrical substation, substatio ...
. The combined transmission and distribution network is known as the "
power grid ''Power Grid'' is the English-language version of the second edition of the multiplayer German-style board game ''Funkenschlag'', designed by Friedemann Friese and first released in 2004. ''Power Grid'' was released by Rio Grande Games. I ...
" in
North America North America is a continent in the Northern Hemisphere, Northern and Western Hemisphere, Western hemispheres. North America is bordered to the north by the Arctic Ocean, to the east by the Atlantic Ocean, to the southeast by South Ameri ...
, or just "the grid". In the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...
,
India India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
,
Malaysia Malaysia is a country in Southeast Asia. Featuring the Tanjung Piai, southernmost point of continental Eurasia, it is a federation, federal constitutional monarchy consisting of States and federal territories of Malaysia, 13 states and thre ...
and
New Zealand New Zealand () is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and List of islands of New Zealand, over 600 smaller islands. It is the List of isla ...
, the network is known as the National Grid. A wide area synchronous grid, also known as an "interconnection" in North America, directly connects many generators delivering AC power with the same relative ''frequency'' numerous consumers. For example, there are four major interconnections in North America (the
Western Interconnection The Western Interconnection is a wide area synchronous grid and one of the two major alternating current, alternating current (AC) power grids in the North American power transmission grid. The other major wide area synchronous grid is the East ...
, the
Eastern Interconnection The Eastern Interconnection is one of the two major alternating current, alternating-current (AC) electrical grids in the North American power transmission grid. The other major wide area synchronous grid, interconnection is the Western Inter ...
, the
Quebec Interconnection Quebec is Canada's largest province by area. Located in Central Canada, the province shares borders with the provinces of Ontario to the west, Newfoundland and Labrador to the northeast, New Brunswick to the southeast and a coastal border ...
and the Electric Reliability Council of Texas (ERCOT) grid). In Europe one large grid connects most of continental Europe. Historically, transmission and distribution lines were owned by the same company, but starting in the 1990s, many countries have liberalized the regulation of the
electricity market An electricity market is a system that enables the exchange of electrical energy, through an electrical grid. Historically, electricity has been primarily sold by companies that operate electric generators, and purchased by consumers or electr ...
in ways that have led to the separation of the electricity transmission business from the distribution business.


Electric power distribution

Electric power distribution is the final stage in the
delivery Delivery may refer to: Biology and medicine *Childbirth *Drug delivery *Gene delivery Business and law *Delivery (commerce), of goods, e.g.: **Pizza delivery ** Milk delivery ** Food delivery ** Online grocer *Deed ("delivery" in contract law), a ...
of
electric power Electric power is the rate of transfer of electrical energy within a electric circuit, circuit. Its SI unit is the watt, the general unit of power (physics), power, defined as one joule per second. Standard prefixes apply to watts as with oth ...
; it carries electricity from the
transmission system In telecommunications, a transmission system is a communication system that transmits a signal from one place to another. The signal can be an signal (electrical engineering), electrical, fiber-optic communication, optical or radio wave, radio s ...
to individual consumers. Distribution substations connect to the transmission system and lower the transmission voltage to medium
voltage Voltage, also known as (electrical) potential difference, electric pressure, or electric tension, is the difference in electric potential between two points. In a Electrostatics, static electric field, it corresponds to the Work (electrical), ...
ranging between 2  kV and 35 kV with the use of
transformer In electrical engineering, a transformer is a passive component that transfers electrical energy from one electrical circuit to another circuit, or multiple Electrical network, circuits. A varying current in any coil of the transformer produces ...
s. ''Primary'' distribution lines carry this medium voltage power to
distribution transformer image:Polemount-singlephase-closeup.jpg, Single-phase distribution transformer in Canada A distribution transformer or service transformer is a transformer that provides a final voltage reduction in the electric power distribution system, steppin ...
s located near the customer's premises. Distribution transformers again lower the voltage to the utilization voltage used by lighting, industrial equipment or household appliances. Often several customers are supplied from one transformer through ''secondary'' distribution lines. Commercial and residential customers are connected to the secondary distribution lines through
service drop In electric power distribution, a service drop is an overhead electrical line running from a utility pole, to a customer's building or other premises. It is the point where electric utilities provide power to their customers.Carson Dunlop "Elec ...
s. Customers demanding a much larger amount of power may be connected directly to the primary distribution level or the
subtransmission Electric power transmission is the bulk movement of electrical energy from a generating site, such as a power plant, to an electrical substation. The interconnected lines that facilitate this movement form a ''transmission network''. This is ...
level.


Electric retailing

Electricity retailing is the final sale of
electricity Electricity is the set of physical phenomena associated with the presence and motion of matter possessing an electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described by Maxwel ...
from
generation A generation is all of the people born and living at about the same time, regarded collectively. It also is "the average period, generally considered to be about 20–⁠30 years, during which children are born and grow up, become adults, and b ...
to the end-use consumer.


World electricity industries

The organization of the electrical sector of a country or region varies depending on the economic system of the country. In some places, all electric power generation, transmission and distribution is provided by a government controlled organization. Other regions have private or investor-owned utility companies, city or municipally owned companies,
cooperative A cooperative (also known as co-operative, coöperative, co-op, or coop) is "an autonomy, autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned a ...
companies owned by their own customers, or combinations. Generation, transmission and distribution may be offered by a single company, or different organizations may provide each of these portions of the system. Not everyone has access to grid electricity. About 840 million people (mostly in Africa) had no access in 2017, down from 1.2 billion in 2010.


Market reform

The
business model A business model describes how a Company, business organization creates, delivers, and captures value creation, value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-pub ...
behind the electric utility has changed over the years playing a vital role in shaping the electricity industry into what it is today; from generation, transmission, distribution, to the final local retailing. This has occurred prominently since the reform of the electricity supply industry in England and Wales in 1990.


United States

In 1996 – 1999 the
Federal Energy Regulatory Commission The Federal Energy Regulatory Commission (FERC) is an independent agency of the United States government that regulates the interstate transmission and wholesale sale of electricity and natural gas and regulates the prices of interstate transport ...
(FERC) made a series of decisions which were intended to open the U.S. wholesale power market to new players, with the hope that spurring competition would save consumers $4 to $5 billion per year and encourage technical innovation in the industry. Steps were taken to give all market participants open access to existing interstate transmission lines.
Order No. 888
ordered vertically integrated electric utilities to functionally separate their transmission, power generation and marketing businesses to prevent self-dealing.
Order No. 889
set up a system to provide all participants with timely access to information about available transmission capacity and prices. * The FERC also endorsed the concept of appointing independent system operators (ISOs) to manage the electric power grid – a function that was traditionally the responsibility of vertically integrated electric utility companies. The concept of an independent system operator evolved into that of regional transmission organizations (RTOs). FERC's intention was that all U.S. companies owning interstate electric transmission lines would place those facilities under the control of an RTO. In it
Order No. 2000
''(Regional Transmission Organizations)'', issued in 1999, FERC specified the minimum capabilities that an RTO should possess. These decisions, which were intended to create a fully interconnected grid and an integrated national power market, resulted in the restructuring of the U.S. electricity industry. That process was soon dealt two setbacks: the California energy crisis of 2000, and the Enron scandal and collapse. Although industry restructuring proceeded, these events made clear that competitive markets could be manipulated and thus must be properly designed and monitored. Furthermore, the Northeast blackout of 2003 highlighted the need for a dual focus on competitive pricing and strong reliability standards.


Other countries

In some countries, wholesale electricity markets operate, with generators and
retailers Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler ...
trading electricity in a similar manner to shares and
currency A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use within a specific envi ...
. As
deregulation Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...
continues further, utilities are driven to sell their
asset In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can b ...
s as the energy market follows in line with the gas market in use of the
futures Futures may mean: Finance *Futures contract, a tradable financial derivatives contract *Futures exchange, a financial market where futures contracts are traded *''Modern Trader'', formerly Futures, an American finance magazine Music * ''Futures' ...
and
spot market The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market, in which delivery is due at a later date. In a spot market, s ...
s and other financial arrangements. Even
globalization Globalization is the process of increasing interdependence and integration among the economies, markets, societies, and cultures of different countries worldwide. This is made possible by the reduction of barriers to international trade, th ...
with foreign purchases are taking place. One such purchase was when the UK's National Grid, the largest private electric utility in the world, bought several electric utilities in
New England New England is a region consisting of six states in the Northeastern United States: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. It is bordered by the state of New York (state), New York to the west and by the ...
for $3.2 billion. Between 1995 and 1997, seven of the 12 Regional Electric Companies (RECs) in England and Wales were bought by U.S. energy companies."Electricity companies in the United Kingdom – a brief chronology," Electricity Association, 30 June 2003
/ref> Domestically, local electric and gas firms have merged operations as they saw the advantages of joint affiliation, especially with the reduced cost of joint-metering. Technological advances will take place in the competitive wholesale electric markets, such examples already being utilized include fuel cells used in
space flight Spaceflight (or space flight) is an application of astronautics to fly objects, usually spacecraft, into or through outer space, either with or without humans on board. Most spaceflight is uncrewed and conducted mainly with spacecraft such a ...
; aeroderivative
gas turbine A gas turbine or gas turbine engine is a type of Internal combustion engine#Continuous combustion, continuous flow internal combustion engine. The main parts common to all gas turbine engines form the power-producing part (known as the gas gene ...
s used in
jet aircraft A jet aircraft (or simply jet) is an aircraft (nearly always a fixed-wing aircraft) propelled by one or more jet engines. Whereas the engines in Propeller (aircraft), propeller-powered aircraft generally achieve their maximum efficiency at much ...
; solar engineering and
photovoltaic Photovoltaics (PV) is the conversion of light into electricity using semiconducting materials that exhibit the photovoltaic effect, a phenomenon studied in physics, photochemistry, and electrochemistry. The photovoltaic effect is commercially ...
systems; off-shore wind farms; and the communication advances spawned by the digital world, particularly with microprocessing which aids in monitoring and dispatching.Borberly, A. and Kreider, J. F. (2001). Distributed Generation: The Power Paradigm for the New Millennium. CRC Press, Boca Raton, FL. 400 pp.


Outlook

Electricity is expected to see growing
demand In economics, demand is the quantity of a goods, good that consumers are willing and able to purchase at various prices during a given time. In economics "demand" for a commodity is not the same thing as "desire" for it. It refers to both the desi ...
in the future. The
Information Revolution The Information Age is a historical period that began in the mid-20th century. It is characterized by a rapid shift from traditional industries, as established during the Industrial Revolution, to an economy centered on information technology. ...
is highly reliant on electric power. Other growth areas include emerging new electricity-exclusive technologies, developments in space conditioning,
industrial process Industrial processes are procedures involving chemical, physical, electrical, or mechanical steps to aid in the manufacturing of an item or items, usually carried out on a very large scale. Industrial processes are the key components of heavy ...
es, and
transportation Transport (in British English) or transportation (in American English) is the intentional Motion, movement of humans, animals, and cargo, goods from one location to another. Mode of transport, Modes of transport include aviation, air, land tr ...
(for example
hybrid vehicle A hybrid vehicle is one that uses two or more distinct types of power, such as submarines that use diesel when surfaced and batteries when submerged. Other means to store energy include pressurized fluid in hydraulic hybrids. Hybrid powertrai ...
s,
locomotive A locomotive is a rail transport, rail vehicle that provides the motive power for a train. Traditionally, locomotives pulled trains from the front. However, Push–pull train, push–pull operation has become common, and in the pursuit for ...
s).


See also

*
AC power In an electric circuit, instantaneous power is the time rate of flow of energy past a given point of the circuit. In alternating current circuits, energy storage elements such as inductors and capacitors may result in periodic reversals of the d ...
*
Distributed generation Distributed generation, also distributed energy, on-site generation (OSG), or district/decentralized energy, is electrical generation and storage performed by a variety of small, grid-connected or distribution system-connected devices referred ...
* Emissions & Generation Resource Integrated Database * Meter Point Administration Number, a unique UK supply number * National Grid (disambiguation) *
North American Electric Reliability Corporation The North American Electric Reliability Corporation (NERC) is a nonprofit corporation based in Atlanta, Georgia, and formed on March 28, 2006, as the successor to the North American Electric Reliability Council (also known as NERC). The original ...
*
Rate Case Utility ratemaking is the formal regulatory process in the United States by which public utilities set the prices (more commonly known as "rates") they will charge consumers. Ratemaking, typically carried out through "rate cases" before a public ut ...
* Reddy Kilowatt, a U.S. electricity corporate logo *
Samuel Insull Samuel Insull (November 11, 1859 – July 16, 1938) was a British American business magnate. He was an innovator and investor based in Chicago who helped create an integrated electrical infrastructure in the United States. Insull created hold ...


References


Further reading

* P. Strange, "Early Electricity Supply in Britain: Chesterfield and Godalming", ''IEEE Proceedings'' (1979). * D. G. Tucker, "Hydro-Electricity for Public Supply in Britain", ''Industrial Archaeology Review'', (1977). * B. Bowers, ''A History of Electric Light & Power'', Peregrinus (1982). * T. P. Hughes, ''Networks of Power'', Johns Hopkins Press London (1983). * IRENA,
INNOVATION LANDSCAPE FOR A RENEWABLE-POWERED FUTURE: SOLUTIONS TO INTEGRATE VARIABLE RENEWABLES
'', (2019). {{Authority control Electric power Energy industry Industries (economics)