Power stations may be located near a fuel source, at a dam site, or to take advantage of renewable energy sources, and are often located away from heavily populated areas. The electric power which is generated is stepped up to a higher voltage at which it connects to the electric power transmission net.
The bulk power transmission network will move the power long distances, sometimes across international boundaries, until it reaches its wholesale customer (usually the company that owns the local electric power distribution network).
On arrival at a substation, the power will be stepped down from a transmission level voltage to a distribution level voltage. As it exits the substation, it enters the distribution wiring. Finally, upon arrival at the service location, the power is stepped down again from the distribution voltage to the required service voltage(s).
Electrical grids vary in size from covering a single building through national grids which cover whole countries, to transnational grids which can cross continents.
Although electrical grids are wide spread, 1.4 billion people are not connected to an electricity grid.
Early electric energy was produced near the device or service requiring that energy. In the 1880s, electricity competed with steam, hydraulics, and especially coal gas. Coal gas was first produced on customer’s premises but later evolved into gasification plants that enjoyed economies of scale. In the industrialized world, cities had networks of piped gas, used for lighting. But gas lamps produced poor light, wasted heat, made rooms hot and smoky, and gave off hydrogen and carbon monoxide. In the 1880s electric lighting soon became advantageous compared to gas lighting.
Electric utility companies took advantage of economies of scale and moved to centralized power generation, distribution, and system management. With long distance power transmission it became possible to interconnect stations to balance load and improve load factors.