An electrical grid is an interconnected network for delivering electricity from producers to consumers. It consists of
Power stations may be located near a fuel source, at a dam site (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.
In the United Kingdom, Charles Merz, of the Merz & McLellan consulting partnership, built the Neptune Bank Power Station near Newcastle upon Tyne in 1901, and by 1912 had developed into the largest integrated power system in Europe. Merz was appointed head of a Parliamentary Committee and his findings led to the Williamson Report of 1918, which in turn created the Electricity Supply Bill of 1919. The bill was the first step towards an integrated electricity system. The Electricity (Supply) Act of 1926 led to the setting up of the National Grid. The Central Electricity Board standardized the nation's electricity supply and established the first synchronized AC grid, running at 132 kilovolts and 50 Hertz. This started operating as a national system, the National Grid, in 1938.
In the United States in the 1920s, utilities formed joint-operations to share peak load coverage and backup power. In 1934, with the passage of the Public Utility Holding Company Act (USA), electric utilities were recognized as public goods of importance and were given outlined restrictions and regulatory oversight of their operations. The Energy Policy Act of 1992 required transmission line owners to allow electric generation companies open access to their network and led to a restructuring of how the electric industry operated in an effort to create competition in power generation. No longer were electric utilities built as vertical monopolies, where generation, transmission and distribution were handled by a single company. Now, the three stages could be split among various companies, in an effort to provide fair accessibility to high voltage transmission.:21 The Energy Policy Act of 2005 allowed incentives and loan guarantees for alternative energy production and advance innovative technologies that avoided greenhouse emissions.
In France, electrification began in the 1900s, with 700 communes in 1919, and 36,528 in 1938. At the same time, the nearby networks began to interconnect: Paris in 1907 at 12 kV, the Pyrénées in 1923 at 150 kV, and finally almost all of the country interconnected in 1938 at 220 kV. By 1946, the grid is the world's most dense. That year that state nationalised the industry, by uniting the private companies as Électricité de France. The frequency was standardised at 50 Hz, and the 225 kV network replaces 110 and 120. From 1956, service voltage is standardised at 220 / 380 V, replacing the previous 127/220 V. During the 1970s, the 400 kV network, the new European standard, was implemented.
Grids are designed to supply voltages at largely constant amplitudes. This has to be achieved with varying demand, variable reactive loads, and even nonlinear loads, with electricity provided by generators and distribution and transmission equipment that are not perfectly reliable. Often grids use tap changers on transformers near to the consumers to adjust the voltage and keep it within specification.
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Transmission networks are complex with redundant pathways. For example, see the map of the United States' (right) high-voltage transmission network.
The structure, or "topology" of a grid can vary depending on the constraints of budget, requirements for system reliability, and the load and generation characteristics. The physical layout is often forced by what land is available and its geology. Distribution networks are divided into two types, radial or network.
The simplest topology for a distribution or transmission grid is a radial structure. This is a tree shape where power from a large supply radiates out into progressively lower voltage lines until the destination homes and businesses are reached. However, single failures can take out entire branches of the tree.
Most transmission grids offer the reliability that more complex mesh networks provide. The expense of mesh topologies restrict their application to transmission and medium voltage distribution grids. Redundancy allows line failures to occur and power is simply rerouted while workmen repair the damaged and deactivated line.
Other topologies used are looped systems found in Europe and tied ring networks.
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In cities and towns of North America, the grid tends to follow the classic radially fed design. A substation receives its power from the transmission network, the power is stepped down with a transformer and sent to a bus from which feeders fan out in all directions across the countryside. These feeders carry three-phase power, and tend to follow the major streets near the substation. As the distance from the substation grows, the fanout continues as smaller laterals spread out to cover areas missed by the feeders. This tree-like structure grows outward from the substation, but for reliability reasons, usually contains at least one unused backup connection to a nearby substation. This connection can be enabled in case of an emergency, so that a portion of a substation's service territory can be alternatively fed by another substation.
A synchronous grid or an "interconnection" is a group of distribution areas all operating with three phase alternating current (AC) frequencies synchronized (so that peaks occur at virtually the same time). This allows transmission of AC power throughout the area, connecting a large number of electricity generators and consumers and potentially enabling more efficient electricity markets and redundant generation. Interconnection maps are shown of North America (right) and Europe (below left).
A large failure in one part of the grid - unless quickly compensated for - can cause current to re-route itself to flow from the remaining generators to consumers over transmission lines of insufficient capacity, causing further failures. One downside to a widely connected grid is thus the possibility of cascading failure and widespread power outage. A central authority is usually designated to facilitate communication and develop protocols to maintain a stable grid. For example, the North American Electric Reliability Corporation gained binding powers in the United States in 2006, and has advisory powers in the applicable parts of Canada and Mexico. The U.S. government has also designated National Interest Electric Transmission Corridors, where it believes transmission bottlenecks have developed.
An entire synchronous grid runs at the same frequency. Where interconnection to a neighboring grid, operating at a different frequency, is required, a frequency converter is required. High voltage direct current links can connect two grids that operate at different frequencies or that are not maintaining synchronism.
In a synchronous grid all the generators must run at the same frequency, and must stay very nearly in phase with each other and the grid. For rotating generators, a local governor regulates the driving torque, maintaining constant speed as loading changes. Droop speed control ensures that multiple parallel generators share load changes in proportion to their rating. Generation and consumption must be balanced across the entire grid, because energy is consumed as it is produced. Energy is stored in the immediate short term by the rotational kinetic energy of the generators.
Small deviations from the nominal system frequency are very important in regulating individual generators and assessing the equilibrium of the grid as a whole. When the grid is heavily loaded, the frequency slows, and governors adjust their generators so that more power is output (droop speed control). When the grid is lightly loaded the grid frequency runs above the nominal frequency, and this is taken as an indication by Automatic Generation Control systems across the network that generators should reduce their output.
In addition, there's often central control, which can change the parameters of the AGC systems over timescales of a minute or longer to further adjust the regional network flows and the operating frequency of the grid. For timekeeping purposes, over the course of a day the nominal frequency will be allowed to vary so as to balance out momentary deviations and to prevent line-operated clocks from gaining or losing significant time.
High-voltage direct current lines or variable-frequency transformers can be used to connect two alternating current interconnection networks which are not necessarily synchronized with each other. This provides the benefit of interconnection without the need to synchronize an even wider area. For example, compare the wide area synchronous grid map of Europe (above left) with the map of HVDC lines (below right).
Electric utilities between regions are many times interconnected for improved economy and reliability. Electrical interconnectors allow for economies of scale, allowing energy to be purchased from large, efficient sources. Utilities can draw power from generator reserves from a different region to ensure continuing, reliable power and diversify their loads. Interconnection also allows regions to have access to cheap bulk energy by receiving power from different sources. For example, one region may be producing cheap hydro power during high water seasons, but in low water seasons, another area may be producing cheaper power through wind, allowing both regions to access cheaper energy sources from one another during different times of the year. Neighboring utilities also help others to maintain the overall system frequency and also help manage tie transfers between utility regions.
A wide area synchronous grid (also called an "interconnection" in North America) is an electrical grid at a regional scale or greater that operates at a synchronized frequency and is electrically tied together during normal system conditions. These are also known as synchronous zones, the largest of which is the synchronous grid of Continental Europe (ENTSO-E) with 667 gigawatts (GW) of generation, and the widest region served being that of the IPS/UPS system serving countries of the former Soviet Union. Synchronous grids with ample capacity facilitate electricity market trading across wide areas. In the ENTSO-E in 2008, over 350,000 megawatt hours were sold per day on the European Energy Exchange (EEX).
All of the interconnects in North America are synchronized at a nominal 60 Hz, while those of Europe run at 50 Hz. Interconnections can be tied to each other via high-voltage direct current power transmission lines (DC ties), or with variable-frequency transformers (VFTs), which permit a controlled flow of energy while also functionally isolating the independent AC frequencies of each side.
The benefits of synchronous zones include pooling of generation, resulting in lower generation costs; pooling of load, resulting in significant equalizing effects; common provisioning of reserves, resulting in cheaper primary and secondary reserve power costs; opening of the market, resulting in possibility of long term contracts and short term power exchanges; and mutual assistance in the event of disturbances.
One disadvantage of a wide-area synchronous grid is that problems in one part can have repercussions across the whole grid. For example, in 2018 Kosovo used more power than it generated due to a row with Serbia, leading to the phase in the whole Synchronous grid of Continental Europe lagging behind what it should have been. The frequency dropped to 49.996 Hz. This caused certain kinds of clocks to become six minutes slow.
A microgrid is a localized group of electricity sources and loads that normally operates connected to and synchronous with the traditional wide area synchronous grid (macrogrid), but can also disconnect to "island mode" — and function autonomously as physical and/or economic conditions dictate.
In this way, a microgrid can effectively integrate various sources of distributed generation (DG), especially Renewable Energy Sources (RES), and can supply emergency power, changing between island and connected modes.
Various planned and proposed systems to dramatically increase transmission capacity are known as super, or mega grids. The promised benefits include enabling the renewable energy industry to sell electricity to distant markets, the ability to increase usage of intermittent energy sources by balancing them across vast geological regions, and the removal of congestion that prevents electricity markets from flourishing. Local opposition to siting new lines and the significant cost of these projects are major obstacles to super grids. One study for a European super grid estimates that as much as 750 GW of extra transmission capacity would be required- capacity that would be accommodated in increments of 5 GW HVDC lines. A recent proposal by Transcanada priced a 1,600-km, 3-GW HVDC line at $3 billion USD and would require a corridor wide. In India, a recent 6 GW, 1,850-km proposal was priced at $790 million and would require a wide right of way. With 750 GW of new HVDC transmission capacity required for a European super grid, the land and money needed for new transmission lines would be considerable.
Demand response is a grid management technique where retail or wholesale customers are requested either electronically or manually to reduce their load. Currently, transmission grid operators use demand response to request load reduction from major energy users such as industrial plants.
Despite the novel institutional arrangements and network designs of the electrical grid, its power delivery infrastructures suffer aging across the developed world. Contributing factors to the current state of the electric grid and its consequences include:
Thirty-seven states plus the District of Columbia took some action to modernize electric grids in the first quarter of 2017, according to the North Carolina Clean Energy Technology Center. The states did so to make electricity systems "more resilient and interactive". The most common actions that states took were "advanced metering infrastructure deployment" (19 states did this), smart grid deployment and "time-varying rates for residential customers".
Legislatively, in the first quarter of the year 82 relevant bills were introduced in different parts of the United States. At the close of the quarter, most of the bills remained pending. For example, legislators in Hawaii introduced a bill that would create an energy storage tax credit. In California, the state Senate had a bill that would "create a new energy storage rebate program".
In August 2018, Advanced Energy Economy (AEE) and Citizens for Responsible Energy Solutions Forum (CRES Forum) published a policy paper that gave five recommendations on ways to modernize the U.S. electric power grid. These recommendations are to streamline the federal permit process for advanced energy projects; encourage grid planners to consider alternatives to investment in transmission; allow energy storage and energy efficiency to compete with additional energy generation; allow large customers to choose their own sources of electricity; and allow utilities and consumers to benefit from cloud computing software.
With everything interconnected, and open competition occurring in a free market economy, it starts to make sense to allow and even encourage distributed generation (DG). Smaller generators, usually not owned by the utility, can be brought on-line to help supply the need for power. The smaller generation facility might be a home-owner with excess power from their solar panel or wind turbine. It might be a small office with a diesel generator. These resources can be brought on-line either at the utility's behest, or by owner of the generation in an effort to sell electricity. Many small generators are allowed to sell electricity back to the grid for the same price they would pay to buy it.
As the 21st century progresses, the electric utility industry seeks to take advantage of novel approaches to meet growing energy demand. Utilities are under pressure to evolve their classic topologies to accommodate distributed generation. As generation becomes more common from rooftop solar and wind generators, the differences between distribution and transmission grids will continue to blur. In July 2017 the CEO of Mercedes-Benz said that the energy industry needs to work better with companies from other industries to form a "total ecosystem", to integrate central and distributed energy resources (DER) to give customers what they want. The electrical grid was originally constructed so that electricity would flow from power providers to consumers. However, with the introduction of DER, power needs to flow both ways on the electric grid, because customers may have power sources such as solar panels. 
The smart grid would be an enhancement of the 20th century electrical grid, using two-way communications and distributed so-called intelligent devices. Two-way flows of electricity and information could improve the delivery network. Research is mainly focused on three systems of a smart grid – the infrastructure system, the management system, and the protection system.
The infrastructure system is the energy, information, and communication infrastructure underlying of the smart grid that supports:
A smart grid would allow the power industry to observe and control parts of the system at higher resolution in time and space. One of the purposes of the smart grid is real time information exchange to make operation as efficient as possible. It would allow management of the grid on all time scales from high-frequency switching devices on a microsecond scale, to wind and solar output variations on a minute scale, to the future effects of the carbon emissions generated by power production on a decade scale.
The management system is the subsystem in smart grid that provides advanced management and control services. Most of the existing works aim to improve energy efficiency, demand profile, utility, cost, and emission, based on the infrastructure by using optimization, machine learning, and game theory. Within the advanced infrastructure framework of smart grid, more and more new management services and applications are expected to emerge and eventually revolutionize consumers' daily lives.
The protection system of a smart grid provides grid reliability analysis, failure protection, and security and privacy protection services. While the additional communication infrastructure of a smart grid provides additional protective and security mechanisms, it also presents a risk of external attack and internal failures. In a report on cyber security of smart grid technology first produced in 2010, and later updated in 2014, the US National Institute of Standards and Technology pointed out that the ability to collect more data about energy use from customer smart meters also raises major privacy concerns, since the information stored at the meter, which is potentially vulnerable to data breaches, can be mined for personal details about customers.
In the U.S., the Energy Policy Act of 2005 and Title XIII of the Energy Independence and Security Act of 2007 are providing funding to encourage smart grid development. The objective is to enable utilities to better predict their needs, and in some cases involve consumers in a time-of-use tariff. Funds have also been allocated to develop more robust energy control technologies.
As there is some resistance in the electric utility sector to the concepts of distributed generation with various renewable energy sources and microscale cogen units, several authors have warned that mass-scale grid defection is possible because consumers can produce electricity using off grid systems primarily made up of solar photovoltaic technology.
The utilities used to be a vertically integrated business, which is to say they owned the power generation, they owned the (transmission) lines and they charged you - they were the ones who managed the bills (commercialization). But nowadays there are other ways to do it, for sustainability, competence and security reasons. What happened with deregulation is that most utilities now no longer own generation. In some places it's illegal for them to. 
Demand response can be achieved at the wholesale level with major energy users such as industrial plants curtailing power use and receiving payment for participating.