The Three Components of the Grid

The US electric grid is often called the largest machine ever built. It consists of over 7,300 power plants, roughly 160,000 miles of high-voltage transmission lines, and millions of miles of local distribution lines. Understanding how it works starts with its three fundamental components: generation, transmission, and distribution.

Generation is where electricity is produced. The US has about 1,200 gigawatts of installed generating capacity. In 2023, natural gas plants generated about 43% of the country’s electricity, followed by renewables at 21%, nuclear at 19%, and coal at 16%. The mix is shifting rapidly as coal plants retire and renewable installations accelerate.

Transmission: The Interstate Highway of Electricity

Once generated, electricity must travel to where it is consumed. Power plants produce electricity at relatively low voltages, typically 11,000 to 25,000 volts. Step-up transformers increase the voltage to between 115,000 and 765,000 volts for long-distance transmission. Higher voltages reduce energy losses during transport.

The transmission system operates on alternating current at 60 hertz. Three major interconnections divide the grid: the Eastern Interconnection, the Western Interconnection, and the Texas Interconnection operated by ERCOT. Within each interconnection, all generators are synchronized to the same 60-hertz frequency. The three interconnections have limited connections between them.

Regional Grid Operators (RTOs and ISOs)

Seven regional transmission organizations and independent system operators manage the day-to-day operation of the grid: PJM, MISO, ERCOT, CAISO, ISO-NE, NYISO, and SPP. These entities do not own any power plants or transmission lines. Instead, they coordinate the dispatch of generators, manage wholesale electricity markets, and ensure that the grid remains balanced and reliable in real time.

Grid operators must constantly match electricity generation to electricity demand, second by second. If generation exceeds demand, the grid frequency rises above 60 hertz. If demand exceeds generation, the frequency drops. Either condition, if sustained, can damage equipment and cause blackouts.

Distribution: The Last Mile

When high-voltage electricity reaches the area where it will be consumed, step-down transformers at substations reduce the voltage to distribution levels, typically between 4,000 and 35,000 volts. Distribution lines carry the electricity through neighborhoods and commercial areas. Final transformers step the voltage down to 120/240 volts for delivery to homes and businesses.

Distribution systems are operated by local utilities, which may be investor-owned corporations, municipal utilities, or rural electric cooperatives. The distribution system is undergoing significant change as it evolves from a one-way delivery system to a two-way network that must accommodate power flowing both from and to customers.

Grid Challenges and Modernization

The US grid faces several interconnected challenges. Much of the transmission infrastructure is decades old and was not designed for current demand patterns. The average age of a US transmission line is over 40 years. Extreme weather events are stressing grid infrastructure more frequently and severely.

Modernization efforts are underway on multiple fronts. Grid-enhancing technologies can increase the capacity of existing transmission lines by 20% to 40%. Advanced metering infrastructure improves the efficiency of local grids. Energy storage provides flexibility that helps manage renewable variability. But estimates suggest the US needs to invest over a trillion dollars in grid infrastructure over the next decade to meet growing demand and maintain reliability.