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What is the power grid and how does it work?

When people go without power during widespread outages, it seems like discussions turn toward the power grid. But what exactly is the power grid, and how does it work? In the U.S., the power system consists of more than 9,200 electric generating units with more than 1 million megawatts of generating capacity connected to more than 600,000 miles of transmission lines, according to the U.S. Department of Energy.

  • First, power is generated at a power plant by converting some form of energy into power. Examples of energy sources include wind, water, steam, oil, coal, nuclear, solar and natural gas.
  • Once the power is generated, it is converted to high voltages so it can be pushed a long distance through the grid via transmission lines (345,000 volts) or subtransmission lines (69,000 volts).
  • Eventually, it is stepped down so it can be sent on to lower-voltage power lines called distribution lines (7,200 volts), which take the electricity to houses and businesses.
  • Once it makes its way there, it gets stepped down again before it enters the structure through drop-down lines (220 volts).
  • Sensors are located at key points throughout the grid to monitor outages.

Some electric utilities generate all the electricity they provide using their own power plants. Some utilities purchase electricity from other utilities, independent power producers or a wholesale market.

How consumers, or end users, purchase energy varies from region to region:

  • The utility providing power may be a not-for-profit municipal electric utility; an electric cooperative owned by its members; a private, for-profit electric utility owned by stockholders (often called an investor-owned utility); or in some states, a power marketer.
  • A power marketer is often a trading company engaged in the purchase and sale of electricity. Generally, these marketers do not own generation or transmission facilities. Rather, they buy electricity from utilities, independent power producers and other suppliers to sell wholesale to other utilities or marketers.

Newer technology is improving how the grid works, inspiring the phrase “smart grid” to describe this evolutionary process. For example, some improvements include:

  • Individual microgrids. With some sources of energy now at consumers’ disposal, some individuals and businesses have their own power source (solar panels, for example).
  • Energy storage technology. This enables companies to store excess energy when not needed and use it later when there is more demand.
  • Smart meter technology. This creates two-way communication between consumers and the electric utility or cooperative by automatically notifying them about outages and other potential issues. Smart meters also allow consumers to see how much electricity they use, when they use it and its cost. Combined with real-time pricing, this allows end users to save money by using less power when electricity rates are highest.

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