How the electrical grid works and how vulnerable it really is

Ever wonder how electricity gets to your home or business? It’s delivered through the grid – a complex network of power plants and transformers connected by more than 450,000 miles of high-voltage transmission lines.

What’s an electrical grid, exactly?

An electrical grid is an interconnected network for delivering electricity from suppliers to consumers. It consists of generating stations that produce electrical power, high-voltage transmission lines that carry power from distant sources to demand centers and distribution lines that connect individual customers.

Electricity is transmitted at high voltages (120 kV or above) to reduce energy losses in long-distance transmission, and is usually relayed through overhead power lines.

Today’s national grid

Power stations may be located near a fuel source, at a dam site or in a place where they can take advantage of renewable energy sources. These stations are often very large and located away from heavily populated areas.

The bulk power transmission network moves 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).

America’s electric grid is actually comprised of three smaller grids, called interconnections, that move electricity around the country. The Eastern Interconnection operates in states east of the Rocky Mountains, The Western Interconnection covers the Pacific Ocean to the Rocky Mountain states, and the smallest – the Texas Interconnected system – covers most of Texas.

Electrical grid vulnerabilities

Despite the novel institutional arrangements and network designs of the electrical grid, its power delivery infrastructures suffer aging across the developed world.

Older equipment has higher failure rates, leading to power outages, which affect society and the economy. The grid’s system layout has also become obsolete. The engineering that it was based on back when it was built is now outdated.

The traditional tools for power delivery planning and engineering are ineffective in addressing current problems of aged equipment, obsolete system layouts and modern deregulated loading levels.

Our grid faces many challenges due to the lack of reinvestment over such a long period of time. Current energy market structures also face some fundamental issues.

For example, more and more large commercial and industrial locations choose to have localized power generation capabilities. Utilities could potentially lose their most profitable portion of bulk revenue, which would further hurt their ability to reinvest into infrastructure.

Weather related disturbances are rising

The number of significant weather-related grid disturbances is rising in the US, with electrical blackouts becoming more frequent and severe. Causes include:

  • More volatile weather
  • Aging electrical infrastructure
  • Equipment failure
  • Lack of maintenance
  • Human error
  • Capacity limits in the grid’s design

Severe weather is the number one cause of power outages in the United States, costing the economy billions in lost output and wages, spoiled inventory, delayed production and damage to grid infrastructure.

Hartford Steam Boiler (HSB) has partnered with Atmospheric and Environmental Research (AER), to develop a solution that calculates the potential consequences of power outages.

Learn more about how the Blackout Risk Model helps stakeholders plan for, manage and minimize the impacts of blackouts. And stay tuned for more information on how we are modeling electrical power outage risks.

 

© 2015 The Hartford Steam Boiler Inspection and Insurance Company. All rights reserved. This article is intended for information purposes only. HSB makes no warranties or representations as to the accuracy or completeness of the content of this article.

Robin Luo, CPCU ARe

Robin is Vice President of Risk Consulting at HSB and product manager for HSB's Blackout Risk Model. He has over 13 years of risk management experience in the insurance industry.

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