The History and Evolution of Our Electric Grid


When you plug in your phone or charge an electric vehicle (EV), your are accessing electricity from the grid. The grid is the network of wires and electrical systems that transport energy from the production source to your home.

Today, the United States uses 16 times more energy than was used in 1950. Modernizing the grid and creating a “smart grid” has increased our electric system’s size and efficiency. The modern grid is more interconnected than ever before. Various sources of energy (renewable and non-renewable) produce electricity to meet our increasing demands.

In this article, we’ll discuss how the grid has evolved and what the future of energy production could look like.

How Was The Grid Established?

The power grid is a complex interconnected system of power plants, power lines and connectors—key infrastructure that powers our homes. Here’s how the grid has developed over time, from its establishment in 1926 to today’s power grid.

The First Grid 

We rarely think much about the sources of our electricity or how it is generated. The electric power grid was created in 1935 when President Roosevelt passed the first federal regulation pertaining to electricity. The Public Utility Holding Company Act (PUHCA) gave monopoly control of prices, infrastructure and transmission to state governments. However, construction of the grid had been ongoing for several years before this was written into law.

The first electric power grid was established in 1882. Pearl Street Station was the nation’s first central power plant and began producing electricity for local homes and businesses. This power plant began with 85 customers in New York City, but its success rapidly increased its customer base.

At the time, direct current (DC) electricity and alternating current (AC) electricity were two competing forms of power. Ultimately, AC prevailed because it’s more efficient and easier to convert from high voltages.

The 1900s saw the rise of many new companies in the industry, which competed with each other to attract customers. However, during the Great Depression of the 1930s, many companies went out of business and competition was reduced. The remaining competitors were assigned specific geographic territories for their exclusive use and were regulated by government agencies. 

By the 1960s, the price of energy had stabilized. Today, there are many state-based regulatory commissions that determine electricity prices.

The Grid Today

The electric grid was originally designed to meet the needs of customers at that time. Today’s grid is aging and being pushed to meet new demands. Even now, many plants and power lines established in the 1900s are still in use today.

Today’s electric grid can be divided into three different phases: generation, transmission and distribution. First, electricity is generated by a variety of sources including fossil fuels. These include oil and gas, nuclear energy, and renewable energy.

Electricity is then transmitted over long distances through high-voltage power lines, as opposed to direct current (DC). Finally, once the electricity reaches its destination, local substations reduce the voltage before distributing it to your home.

In order to meet today’s energy demands, our grid must be flexible. It needs to make the shift from non-renewable forms of energy towards sustainable sources like solar power and wind. The grid of the future must also support electric vehicles (EV), as well as the infrastructure needed for charging stations. 

While we add clean energy capacity, it’s also critical that we secure the power system against threats. These include hackers, foreign actors and natural disasters, which are increasing in frequency as a result of climate change.

Grid Modernization

Grid modernization would involve updating the grid to become a smarter network. This means it would support more electricity generation, longer transmission distances and flexible power sources. Two factors contributing to this update are the expansion of renewable energy and decentralizing energy sources.

Expanding Renewables 

The integration of renewable energy sources has been central to maintaining the grid’s energy security and overall reliability. Due to the limited supply of fossil fuels and increasing energy consumption, we need to implement “decarbonization.” The United States has made great strides in expanding renewable energy. In 2017, 97% of the new energy capacity added to the grid was from renewable sources.

However, the integration of renewable energy into our power system presents challenges. For example, it’s tough to predict how much electricity solar panels will generate since we don’t know how much sunlight they’ll get.

To overcome this obstacle, the United States. has created high-voltage, direct current (HVDC) power lines that can transport electricity over long distances. For example, if California has plenty of sunshine and a neighboring state is going through a power outage, power lines can transport electricity to that state.

Expanding HVDC transmission across the country is complicated by federal, state and local regulations because of permitting. These power lines cross many jurisdictions and don’t directly benefit each one. As a result, it can be difficult to convince stakeholders that they’re worth the investment.

Energy storage, like utility-scale batteries or fuel cells that collect and release power, can help support the grid. As our homes and businesses need electricity, however, we’ll need a grid that can support greater demand. This means today’s aging infrastructure likely won’t cut it.

Localizing Energy Sources 

Across the nation, many communities have moved toward a decentralized grid. This includes smaller and more local electricity sources to replace and support large utility-scale power systems. People can now be producers as well as consumers of energy. For example, a homeowner with solar power panels on their roof can produce electricity to power their home.

Renewable energy often powers decentralized systems. These are referred to as distributed energy resources (DERs) and like microgrids, they provide stability when demand is high. They can also be paired with battery storage, which adds resiliency to homes and businesses during power outages.

What Policies Support the New Electric Grid?

The United States government has recently passed a few key pieces of legislation that will help modernize the electric grid. These include the infrastructure bill (2021), the Inflation Reduction Act (2022), and FERC Order 2222 (2021). 

Infrastructure Bill 

In 2021, President Biden signed the Infrastructure Investment and Jobs Act into law. This was a bipartisan measure commonly known as “the infrastructure bill.” The act provides $65 million for an electric grid upgrade. This will include the expansion of power lines and the search for new sources of energy.

Inflation Reduction Act 

The Inflation Reduction Act of 2022 will help decarbonize the United States electric grid. This will reduce our reliance on natural gas and coal, which currently provide 60% of electricity generation. The bill will provide $270 billion over 10 years for various initiatives. This will facilitate the decarbonization of our economy, as well as new tax credits for:

  • nuclear, clean hydrogen,
  • carbon capture,
  • clean fuels production,
  • clean manufacturing, and
  • wind, solar power, and battery manufacturing.

Investments have also been made to improve the reliability and resilience of rural electric power systems. This will also create more jobs in the energy and utilities sector.

Frequently Asked Questions About the Electric Grid

How Outdated is the Power Grid?

Power lines in the United States are, on average, at least 25 years old. Some power lines from the early to mid-1900s have even been preserved and still exist today. The outdated infrastructure of the grid and regional utility monopolies make it difficult to update or integrate new power lines.

Why is the Price of Electricity Increasing? 

The rising price of natural gas and the increasing demand for electricity drive up the cost of electricity every year. Geo-political conflict and threats to the natural gas supply chain have contributed to price increases.

Will Power Lines be Buried Soon?

Underground Power lines are less vulnerable to weather damage and power outages. Alternatively, the process of burying existing lines is disruptive to communities and expensive. However, due to their resilience benefits, new power lines are increasingly being buried in areas undergoing development.


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