How the world's first electric grid was built
When Britain actually made something
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In 1883, Sir Coutts Lindsay, owner of the Grosvenor Art Gallery in Bond Street, decided that he wanted to illuminate his paintings without the smoke produced by gas lanterns. He installed a small generator, first in the yard and then in the basement of the gallery. This was a cutting-edge status symbol at the time. The generator turned out to produce more than enough electricity to power his gallery lights, so he started to supply the excess power to his neighbors via overhead cables.
In 1887, after being pitched by a professional engineering team, Sir Coutts formed the London Electricity Supply Corporation. To spare passersby the noise of the generator, to gain access to cooling water, and to allow it to buy cheaper coal transported by river, the corporation moved to a new base in Deptford. The Deptford facility was linked by cables to substations at the Grosvenor Gallery, Trafalgar Square, and Blackfriars. By 1891, the world’s largest generator and one of the world’s first modern power stations was up and running.
For its first decade, the project struggled as cost overruns, frequent fires, challenges meeting public demand, and a fatality during a government inspection made profits elusive.
The story of Coutts Lindsay and the London Electricity Supply Corporation is typical of the early days of electricity supply, not just in the UK, but around the world. Uncoordinated local efforts struggled with growing demand and the absence of economies of scale. In New York, Thomas Edison’s Pearl Street Station, completed in 1882, became one of the first centralized power plants. It served an area of one square mile.
The early market for electricity generation and distribution was chaotic. The first two decades of the 20th century saw UK local authorities and a grab bag of private companies locked in bitter and counterproductive competition with each other. Between 1900 and 1913, 224 new generation projects came online, at varying voltages, frequencies of supply, and using different kinds of current, and almost all using their own cables.1 In 1918 London, there were 50 different systems, ten different frequencies, and 24 voltages in operation.
This era saw entirely privately-financed companies expand supply significantly, and prices fell steadily as they did so. In that respect, it is similar to the railway manias of the 1840s and 1860s, when speculative investment in railway projects led to over 6,000 miles of railway line being constructed – but also incinerated the modern equivalent of £300-400 billion of investors’ money, because so many turned out to be uneconomical.
As usage ramped up and resources were squeezed, especially during the First World War, the limitations of the UK’s electricity system became apparent. To understand why, we need to take a brief detour into physics.
Grids and why we need them
The two most common forms of current are alternating current (AC) and direct current (DC). AC works by running a current back and forth, contrasting with DC, which flows in only one direction. Thanks to these frequent direction reversals, AC creates a changing magnetic field that induces voltage in another coil of wire through electromagnetic induction. This field means it is easy to step voltage up or down, depending on the number of coils in this transformer wire. DC, with a static magnetic field, is unable to do this efficiently.
AC is the backbone of modern electricity systems. Power is transmitted over a long distance at a higher voltage to minimize power loss, and then stepped down to lower voltages at substations. The higher voltage means the same power is transmitted with less electrical current flowing through the wires, resulting in less energy being wasted as heat.
The London Electricity Supply Corporation were early pioneers in the use of AC. But they struggled against local operators who would cheaply knock together small DC networks, an approach popularized by Edison. These networks could effectively illuminate local neighborhoods, but not transmit electricity efficiently over any meaningful distance.
DC, however, benefitted from an incumbency advantage. Early electrical devices had been designed for DC, while the development of AC components like electrical motors initially lagged behind. DC proponents like Edison also stoked public fear of AC, arguing that higher voltages would be dangerous. Edison went as far as staging public demonstrations of animals being electrocuted by AC.
The lack of standardization in early electricity systems caused problems. It meant that electric equipment designed for one power source couldn’t work with another. If a motor was built for one frequency, it could run too fast and overheat if operated on another. An electric iron designed for a DC system wouldn’t work on an AC one. Industrial equipment couldn’t easily be standardized across regions. Electricity suppliers rendered themselves uneconomical by building parallel distribution networks.
The First World War drove home the shortcomings of this approach. Coal prices more than doubled when munitions factories faced massively increased demand just as coal miners were being enlisted. These spiraling costs led factories to abandon their private generators and ask to be connected to municipal electricity projects. However, there was a shortage of both generators and factory capacity to manufacture them. Electricity demand increased more in those four years than it had in the prior 32, but thanks to their inefficiency, many local electricity undertakings still failed to be profitable, relying on a mix of municipal subsidy and wealthy investors.
This shortage of generators led the government to restrict the creation of private generation capacity and to strongly encourage manufacturers to move to AC. Meanwhile, municipal electricity projects started to connect to one another (known as interconnection), so they could back each other up during periods of high demand, building resilience into the public system.
Parliamentary reports during 1918 and 1919 proposed the quasi-nationalization of the industry. They concluded that the UK needed to move from local generation projects to a national network. MPs, however, saw this as too radical and opposed any form of coercion. As a result, they passed the weaker Electricity (Supply) Act of 1919. This established regional joint electricity authorities: statutory bodies tasked with expanding interconnection between local projects.
The joint electricity authorities, along with the government’s electricity commissioners, lacked any powers of compulsion. They could hold local consultations to try to persuade operators to interconnect their infrastructure, but would routinely run into local opposition. Companies saw little incentive to change, were reluctant to work with their competitors, and commissioners struggled to navigate a world of petty municipal rivalry.
While the government was frustrated by the intransigence of industry, it arguably only had itself to blame. Private energy projects were regulated by a series of Electricity Acts, introduced between 1882 and 1909. Not only did these geographically restrict companies, they gave local authorities the right to buy a generation project after 42 years at book value. As investors could not be sure of keeping hold of their business once it became profitable, it was hard to raise capital and there was little incentive to build out infrastructure. Meanwhile, municipal projects were regarded as useful sources of revenue by local authorities. While working with their neighbors might make sense from the standpoint of national efficiency, no local authority wanted to export jobs and revenue.
The first moves towards centralization
This meant that the UK began to lag the US, Germany, Switzerland, Sweden and many others on per capita consumption of electricity.
US companies, which thanks to geography could benefit from larger thermal and hydroelectric power plants, were incentivized to consolidate and build larger plants. This would allow the cash flow from one project to be used to finance the development of another. By 1932, eight holding companies controlled three-quarters of the private electricity generation projects.
Meanwhile in Germany, the government was actively pushing for regional and inter-regional (as opposed to municipal) interconnection with a firmer hand. By the mid 1920s, the mixed public and private interconnected system serving the Ruhr aggregated 3,000 gigawatt hours of electricity, versus 800 gigawatt hours amassed by the UK’s interconnection system in the heavily industrialized north east.
In 1925, the UK Government commissioned an inquiry into the state of the UK electricity market. It concluded that: ‘Of the 438 generating stations owned by authorized undertakings, not more than about 50 can be regarded as being of really suitable size and efficiency. [...] The percentage of stand-by plant is unduly high and the load factor is unreasonably low. Interconnection is not carried out as a definite policy [...] and the resultant loss to the country has been heavy, and becomes daily heavier.’
The inquiry resulted in another Electricity Supply Act, which paved the way for an ambitious national scheme of interconnection, defying Conservative backbenchers who viewed it as dangerous state intervention. The newly established Central Electricity Board was tasked with creating a synchronized AC grid, running at a consistent voltage and frequency. While the ownership of generation companies and local distribution networks would not change, the board would oversee their day-to-day management.
The National Power network (renamed the ‘National Grid’ three years later) began operations in 1933. It spanned over 4,000 miles of transmission lines, crossing 60 rivers with the use of special towers. The transmission towers provoked public opposition, leading the Central Electricity Board to run a competition to select a design. Architecth Sir Reginald Blomfield judged the competition, picking an Ancient Egyptian-inspired design would soften the pylons’ appearance. Astonishingly by modern British standards, all of the wires, towers, substations, and cables were built and connected in six years.
The Grid began life as a series of interconnected regional grids, rather than as a national system. But in one night in October 1937, rebellious engineers decided to synchronize the regional grids as an experiment, allowing electricity to flow freely between them for one night. This became official policy the next year.
Beyond some additional regional interconnection, the infrastructure of the grid would go largely unchanged between the 1930s and the end of the war. This interconnection would prove valuable in the intervening period. When generating capacity was knocked out during an air raid, power could be restored while repairs were carried out. Power generation in south Wales was able to reinforce capacity that had been knocked in the south east of England. Meanwhile, unused electricity generated in blacked-out London could supply factories in the north.
After the war, the Labour government nationalized the grid. This was partly driven by their convictions about the power of state ownership, but also out of practicality. The Grid had integrated 171 generation stations under the authority of the Central Electricity Board and had created an effective electricity generation network. However, local distribution was split across 562 private and municipal entities.
The private entities operated under a franchise system and feared that when these expired, local authorities would scoop up urban distribution, leaving them with only small uneconomic bits of rural infrastructure. This meant that they had little incentive to support interconnection with municipal projects.2
Meanwhile, the supervision of private companies operated under a cumbersome mechanism. The Central Electricity Board would buy the entire output of a power station and then sell back to the owner anything they needed for their own local distribution network. They would have to negotiate the price with every owner individually and these discussions could be protracted.
The incoming Labour government in 1945 concluded that nationalization was the easiest way to end the split between ownership of power stations, control of generation, and management of transmission. It would allow the government to directly invest in new generation capacity and infrastructure, construction of which had been effectively frozen during wartime, without having to coordinate and negotiate with hundreds of private actors.
The Electricity Act 1947 created the British Electricity Authority, which took control of the power generation and grid transmission, and created new area electricity boards would then sell it on to consumers.
By 1950, the grid was running up against its physical limitations. Though it was theoretically a ‘national’ grid, it had been built as distinct networks serving individual regions, with the assumption that flows between these networks would be small (though essential). As the energy demands of London, Manchester, Merseyside, and Tyneside increased, there was a need to transmit electricity generated by coal plants in the East Midlands and Yorkshire, whose grids had surplus power.
The Supergrid was born, the fun name chosen to build public excitement. Built between 1950 and 1960, its main purpose was not to connect local areas to their regional grids, but to move electricity between the regional grids. Since the electricity was all going to be stepped down in one go, it could use a higher voltage of 275 kilovolts (versus the 132 kilovolts of the original grid) to reduce transmission loss.
The Supergrid cost roughly the same to build as the original grid (£1.5 billion in today’s money), but took ten years to complete, despite stretching for only around a quarter of the length. Partly this was just because Supergrid cables were heavier, and needed glass suspension insulators to prevent entire towers going live, but it was also owing to changes in planning rules. The 1947 Town and Country Planning Act threw sand in the gears, as the Central Electricity Generating Board had either to win local authority acceptance or ask the Ministry of Fuel and Power to convene an inquiry, where a government appointed inspector would take evidence on local amenity questions. When the original grid was built in the 1930s, local authorities could raise concerns about projects, but had no power to stop them going ahead.
Over the course of the 1960s and 1970s, the UK would gradually upgrade the supergrid to 400 kilovolts, but structurally the grid remained relatively recognizable for the next 20 years. In 1961, the UK and French governments commissioned ASEA, a Swedish electricity company to build the first UK-France electricity interconnector, allowing the two countries to trade excess power.
Radical change wouldn’t come again until the Electricity Act of 1989, which was part of Margaret Thatcher’s governments’ pushes to privatize utilities. The Central Electricity Generating Board was dismantled, re-creating a competitive generation market while the newly formed National Grid Company took over transmission and was privatized through a 1995 stock market flotation. Regional electricity boards became fourteen private Distribution Network Operators. The Distribution Network Operators underwent multiple ownership changes and consolidations, eventually forming the current structure of six ownership groups operating fourteen license areas, all functioning as regulated private monopolies.
The privatization has gone on to be a matter of controversy ever since, with critics accusing the privatized National Grid public limited company of prioritizing dividends and profits over investment. But this is simplistic. By allowing private companies to invest in the network, transmission and distribution costs have fallen by 30 percent since the 1990s. Meanwhile, nationalization came with its own distortions. For example, to support domestic industry, the Central Electricity Generating Board would pay twice the international price for coal.
Overall electricity prices continued their slow decline until 2002, after which point the centuries-long trend turned around.
The current government made the decision to renationalize the operation (although not ownership) of the electricity network, moving this task out of National Grid into a new National Energy System Operator in October 2024. This takes our model full circle back to a version of the 1920s: national operation with private ownership. As in the early days of the UK’s electricity network, we are now seeing the consequences of fragmented planning, as our account of the breaking of the grid makes clear.
Alex is an editor at Works in Progress, focused on AI and energy. He’s also the author of Chalmermagne, a Substack covering technology, policy, and finance.
For the early history of the grid in the UK, I’ve used Leslie Hannah’s Electricity Before Nationalisation. A Study of the Development of The Electricity Supply Industry in Britain to 1948 (1979) and British Commerce and Industry (1934) by various (which has been excerpted here by Grace’s Guide)
For this, I’ve drawn on R Kelf-Cohen’s British Nationalisation: 1945-1973 (1973)
Alex, you may be interested to hear that the two main industrial regions of Japan, centered around Tokyo and Osaka, operate at different frequencies (50 Hz and 60 Hz) and are (as a result) minimally connected, with little energy sharing possible. This is the result of the two industrial regions separately importing equipment in the late 19th century from Europe (Germany) and the United States, slowing building capacity and distribution, and never reconciling the two systems. This anomaly bit Japan (Tokyo and eastern Japan, really) in the ass after the earthquake and tsunami of 2011, after which the government shut down the country's nuclear energy plants, creating an electricity shortage. The western region had plenty of power, but the "pipe" connecting the two regions has a tiny capacity, and energy sharing is not possible at scale.
Alex, great read and thank you for putting this together.
Have a great day and keep up the good work.