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How electricity grew up? A brief history of the electrical grid…

Once upon a time, in a land not all that far away, the birth of the Pearl Street Station was the beginning of what we would eventually come to recognize as the modern electrical grid. To be a little more precise, the Pearl Street Station, the first central power plant in the U.S., began producing electricity on September 4th, 1882.  It was located at 255 – 257 Pearl Street in Manhattan. It initially served 85 customers, providing electricity to 400 lamps.

Here’s what the first incarnation of the electrical grid looked like in 1882:

This first experiment with the electrical grid was wildly successful. By 1884, the Pearl Street Station had added 3 more generators, and was serving 508 customers with 10,164 lamps. In addition, the Edison Illuminating Company developed similar grids in Shamokin, PA (Fall 1882), Sunbury, PA (July 4, 1883), Brockton, MA (October 1, 1883), Mount Carmel, PA (November 17, 1883), and Tamaqua, PA (1885) over the next 3 years. (For all you car buffs: Henry Ford became an engineer with the Edison Illuminating Company in 1891 and was promoted to Chief Engineer in 1893.)

The War of the Currents: Edison vs Tesla / Westinghouse

As with all good business ideas, competition arose quickly to Thomas Edison’s company.  A competitor to Edison’s direct current (DC) technology was George Westinghouse’s alternating current (AC) technology. Think back to the VHS vs Betamax format war of the 70s and early 80s – only one was going to survive.

AC had a decided advantage over DC for the transportation of electricity over long distances, as it was much easier and cheaper to “step-up” and “step-down” voltage. This is due to Ohm’s law: I = V/R, where I = current, V = voltage, and R = resistance. By increasing voltage, resistance is reduced. The more resistance exists, the more electricity is lost as heat.  Also, the higher the voltage, the smaller the wire can be used. As a result, DC generators had to be located within a mile of the load, while AC generators could be constructed much further away.

Around the same time, the idea of economies of scale began to be applied to the electrical industry. It became more and more apparent that a large centralized power plant was much more efficient (and cheaper) at providing electricity over a wide area than a small power plant was at providing electricity over a small area. Just before the turn of the century, Westinghouse built a hydroelectric power plant on Niagara Falls, and using the AC technology sent the electricity to Buffalo, NY – 20 miles away!

With advances in the AC distribution system, here’s what the electrical grid looked like around the turn of the century (1900):

The Age of Private Electric Companies (1900 – 1932)

After Westinghouse “won the war”, competitive pressure led to the growth of the electric companies in strange ways. All of the companies competing in this market at this time were all privately owned, and un-regulated. They understood economies of scale, and so they looked for places where they could build large electricity generating plants and where they could serve the most number of people with those power plants. Even though it was technically feasible to send electricity over long distances thanks to Westinghouse’s improvements, it was still expensive to build those wires over long distances. At this time, there were only a small number of places where a large number of people could be served by a single power plant. When it came to the best locations, Boston, New York, and Philadelphia were at the top of the list. This led to some interesting developments where if you lived in one of these cities, several electric companies would have their wires running to your building and would try to sell you electricity. Below is a picture from those crazy days:

This was a pretty good time to be an electrical customer in the city, except for the eyesore of all those wires running overhead. There were a bunch of electric companies competing for your business, and you could pick which one you wanted. But, if you lived out in a rural area, times weren’t so good.  Because of how far you lived from other people, it was too expensive for an electric company to run wires to your building.

The Great Depression put an end to this era in the U.S. electricity industry. First, the Great Depression greatly reduced the number of people who could afford to purchase electricity, and many of the private electric companies closed their doors. (The silver lining is that the Kennedy family took this opportunity to invest their earnings from bootlegging into these same electric companies, hoping that as the economy recovered, so would these companies.) Second, many of the New Deal projects centered around the building of massive electricity generation plants, including the Hoover Hydro-electric Dam, and all the hydro –electric dams that made up the Tennessee Valley Authority project. The Federal Government was not about to undertake these massive projects without making certain that all would benefit from them.

This led to the regulation of all private electric companies and to the assignment of specific territories to these electric companies. Each private electric company would be granted a monopoly to sell electricity in a given territory in exchange for making sure that all the people in that territory would have access to electricity. The government would regulate these companies, and watch them very closely to make certain that these electric companies did not abuse the monopoly they had been given. After all, running to sets of wires to a building just didn’t make sense.

This is what the grid looked like at this point (1935):

From 1935 on, the electrical grid looked very much like it does above. There was massive growth in the industry, with more and more people having a safe and reliable supply of electricity. But, fundamentally, the technology did not change significantly during this time. And, it remained nearly unchanged until 1978…

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