from Schiff Sovereign:
The lights went on at approximately 3pm on September 4, 1882 in New York City.
Thomas Edison (with major funding from JP Morgan) had spent roughly two years building the first-ever commercial power plant, located in Manhattan’s financial district. Its total capacity was about 600 kilowatts… barely enough to power a single rack of GPUs today.
But at the time it was nothing short of miraculous.
Edison’s coal-fired DC power plant initially served just 82 customers, and electricity was nothing more than a luxury flex by the ultra-wealthy.
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But over time– especially after Westinghouse and Tesla’s alternating current became the gold standard– electrification rates in the United States skyrocketed.
At the turn of the 20th century, hardly anyone had electricity in their homes. By 1920, it was about 35%. By the time the Great Depression hit in 1929, roughly 70% of US homes were electrified, and urban areas were nearly 85%.
The systems were surprisingly reliable given the rudimentary technology of the day. Blackouts were not infrequent, but they were generally short and localized, often just affecting a few streets or houses.
And typically the biggest reason for a short, localized blackout was simply because electrical demand was increasing more rapidly than the grid could create new supply. More and more homes were being electrified, and, after World War II, consumer appliances like refrigerators and air conditioners began consuming more power. We’ll come back to that.
In response, the industry began looking for efficiencies to be able to scale more quickly. They built larger, beefier power plants and connected their independent grids to be able to share reserves and load balance.
In short, they planned for speed and scale. Not resilience. And the end result was an incredibly complex network that was highly vulnerable to systemic failure.
That failure first came at 5:16pm on November 9, 1965: a minor maintenance issue near Niagara Falls triggered a chain reaction across the entire grid. 30 million people went without power– most until the next morning, some for a few days.
It was a wake-up call… and the first catastrophic grid failure of many more to come. So naturally the government stepped in to “fix” it.
With the electrical grid’s vulnerabilities laid bare, Congress held inquiries and hearings. New rules and regulations were passed. And, before long, the US electrical industry became a confusing alphabet soup of state, local, and federal authorities– ISOs and RTOs, FERC, PJM, MISO, CAISO, SPP, and so many more.
Layers and layers of bureaucratic agencies didn’t fix anything. But technology was quite fortunately on America’s side, and over the past few decades, advances (like LED bulbs) made consumer appliances more energy efficient. Power plants also became more productive.
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