Generation: How Electricity Gets Made | Energy and Physical Infrastructure Literacy Tutorial

The Common Mechanism

Almost all electricity generation, historically, uses the same trick: spin a magnet inside a coil of wire. The motion induces current in the wire. The output is electricity.

The question is: what spins the magnet?

Thermal plants (coal, gas, nuclear, biomass)    steam, pushed by heat
Hydro                                            falling water
Wind                                             moving air
Geothermal                                       underground heat via steam

Solar photovoltaic (PV) breaks the pattern: it produces electricity directly from sunlight, without a spinning machine. More on that below.

Once you see the common mechanism, generation becomes: how do you produce the rotation? Each source is just a different answer to that question.

Thermal Plants

A thermal plant burns or heats something, uses the heat to boil water into steam, and spins a turbine with the steam.

Fuel or heat source → boiler → steam → turbine → generator → electricity

Most of the world's electricity still comes from thermal plants.

Coal

Burns coal in a boiler. Steam spins the turbine. Has powered the industrial world for over a century.

Capacity typical: 500 MW to 2 GW per plant
Capacity factor: 40-70% (depending on age and role)
Issues: CO2, air pollution, ash, water use
Status: declining in most rich countries; still rising in some developing ones

Natural gas

Burns gas. Two main types:

Simple cycle: gas-driven turbine directly, quick to start, less efficient
Combined cycle: uses the gas turbine's waste heat to also make steam, more efficient (~60%+)

Gas plants can start and stop relatively quickly, making them flexible. That flexibility is why they often fill the gaps between steady sources and variable ones.

Capacity typical: 100 MW to 2 GW
Capacity factor: 30-60% (varies widely by role)
Issues: CO2 (less than coal, more than zero), methane leaks, fuel cost volatility

Nuclear

Splits uranium atoms. The fission heat boils water. Steam drives the turbine.

Capacity typical: ~1 GW per reactor (large); several hundred MW (small modular, mostly in development)
Capacity factor: ~90%+ (runs near constantly)
Issues: long construction times, cost overruns, waste storage, public acceptance
Fuel economy: one fuel load lasts 18-24 months; low fuel cost once built

Nuclear's role in the energy transition is contested. It produces very little CO2 (only construction and fuel processing contribute), has excellent land use, and provides steady "firm" power. It is also expensive to build, slow to permit, and politically polarising.

Biomass

Burns wood, crop residues, or purpose-grown biomass. Similar thermodynamics as coal. Can be carbon-neutral if the biomass is sustainably grown (debatable in practice).

Capacity typical: 20-600 MW
Capacity factor: varies
Issues: air pollution, land use, questionable carbon accounting

Hydro

Uses falling water to spin turbines. The oldest form of modern electricity generation.

Large dams

Build a dam, flood a valley, release water through turbines. Generates steadily, can ramp up and down quickly, provides water management beyond electricity.

Capacity typical: 100 MW to 22 GW (Three Gorges in China)
Capacity factor: 30-60% (depends on water availability)
Issues: displacement, ecosystem disruption, sedimentation, drought risk
Advantages: cheap once built, long-lived (dams run 50-100 years), fast ramping

Run-of-river hydro

Small dams with minimal reservoir. Captures flow but doesn't flood as much land. Less dispatchable than large dams.

Pumped storage

Not really generation; energy storage. Pump water uphill when power is cheap; release it through turbines when power is expensive. Still the world's largest form of electricity storage, by a wide margin.

Wind

Modern wind turbines are enormous machines. The blades on a large offshore turbine can be longer than a football field. Wind moves the blades, which drive a generator at the top of the tower.

Onshore capacity: 2-6 MW per turbine typically
Offshore capacity: 10-15 MW per turbine (and rising)
Capacity factor: 30-45% onshore, 40-60% offshore
Installation scale: wind farms are 50 MW to several GW

Wind is variable: it blows when it blows. Modern turbines can adjust blade angle and generator load to smooth output slightly, but fundamentally the resource is intermittent.

Wind is now the cheapest or near-cheapest source of new electricity in many regions. Its economics have been transformed by scale and improvement of the hardware.

Solar

Two broadly different technologies:

Solar PV (photovoltaic)

Semiconductor panels convert sunlight directly to DC electricity. No moving parts. Inverters convert to AC for the grid.

Residential scale: 3-15 kW
Utility scale: 50 MW to several GW
Capacity factor: 15-27% (depends on latitude, weather, tracking)
Cost: has dropped 90%+ since 2010; now the cheapest source of electricity in most of the world, in good conditions

Solar PV is the big success story of the energy transition. Costs kept falling longer and faster than any forecast predicted.

Concentrating solar (CSP)

Mirrors focus sunlight onto a receiver; heat drives a steam turbine. Can include thermal storage (store hot molten salt; run turbine later). A thermal plant whose fuel is sunlight.

Typical capacity: 50-200 MW
Capacity factor: 20-40% (higher with storage)
Status: less cost-competitive than PV in most locations; specific roles in desert regions with strong direct sunlight

Geothermal

Uses natural heat from the Earth to drive steam turbines. Where it works (volcanic regions like Iceland, parts of Kenya, California), it's steady and low-carbon.

Capacity typical: 10-300 MW per plant
Capacity factor: ~70-95%
Status: limited by geology in most locations; enhanced geothermal systems aim to expand the geography

Tidal and Wave

Tidal barrages (like dams across estuaries) and wave-capture devices. Small global contribution. Specific niches. Engineering challenges in salt water and storm conditions are real.

Comparing Sources

A simple comparison table (rough, varies by region and year):

Source          LCOE (2024)    Capacity factor   CO2
Utility solar   $30-50/MWh     20-25%            Near-zero operation
Onshore wind    $30-50/MWh     30-45%            Near-zero operation
Offshore wind   $60-90/MWh     40-60%            Near-zero operation
Natural gas CC  $40-75/MWh     variable          ~400 gCO2/kWh
Coal            $70-150/MWh    40-70%            ~900 gCO2/kWh
Nuclear new     $80-180/MWh    ~90%              Near-zero operation
Existing hydro  $10-30/MWh     30-60%            Near-zero operation

LCOE is Levelized Cost of Electricity (averaged lifetime cost per unit of energy). It doesn't capture everything; see chapter 08.

The headline: solar and wind are now typically the cheapest new electricity. Firming them up (storage, flexible gas, nuclear, grid) adds costs that aren't in LCOE.

Capacity Factor in Detail

Capacity factor is the single most-missed concept in generation.

capacity factor = actual energy produced / (capacity × hours in period)

A 100 MW solar farm has 100 MW of peak capacity. If it runs at full power only at midday, zero at night, and varies with weather, its actual annual energy might be equivalent to 25 MW running 100% of the time. That's a 25% capacity factor.

Different sources have radically different capacity factors. This affects:

How much energy you get per unit of capacity built
How many units you need to match a given demand
The grid management problem (see chapter 04)

When a news article says "a solar farm the size of X will power Y homes", check the math. It usually assumes capacity factor and treats energy (kWh) as the real unit.

Emerging Sources

Worth brief mention:

Small Modular Reactors (SMRs): smaller nuclear, designed for factory manufacture. Years from widespread commercial deployment. Promising but unproven
Fusion: always 30 years away, except maybe less so now. Real progress in recent years; commercial viability still uncertain
Green hydrogen: electrolyse water with renewable electricity; use hydrogen as fuel or feedstock. Expensive today; the subject of massive investment
Advanced geothermal: fracking techniques adapted to create heat exchangers in hot rock. Pilots running; cost trajectory unclear

Don't bet the farm on any of these for the next decade. They may become important; they aren't deployed yet.

The Mix by Country

Electricity mixes vary enormously:

Iceland: ~99% renewable (hydro + geothermal)
France: ~70% nuclear + substantial hydro
Norway: ~95% hydro
Germany: ~55% renewable in 2024, with coal and gas still significant
US: ~20% renewable, ~20% nuclear, ~60% fossil in 2024
China: largest renewable installer and largest coal user, simultaneously
India: mostly coal, rapidly adding solar

National context matters. Policies that make sense in Iceland don't necessarily transfer to Nigeria.

Common Pitfalls

"X is the cheapest; we should build only X." LCOE isn't the whole picture. A grid that's 100% variable renewables without firming is a grid that fails. Costs of firming matter

"Nuclear is the answer." Nuclear has real advantages (reliability, low land use, low emissions) and real problems (cost, construction time, politics). It's part of the answer in some regions, not all

"Renewables can't power everything." Renewables plus storage plus transmission plus demand response plus some firm power can do a lot. What "plus a lot" costs is the real question

"Fossil fuels are over." They're not. They still provide most of the world's primary energy. The transition is happening but is decades from complete

"Coal capacity factor is 90%." It was, historically. In markets with lots of renewables, coal plants run less because they're more expensive than renewables on the margin. The capacity factor has fallen meaningfully in recent years

Next Steps

Continue to 04-the-grid.md for how that generated electricity reaches your outlet.