close up of string of light bulbs illuminating a room

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Why is generating electricity so important today?

Power generation comprises all existing processes for transforming energy of any type (chemical, kinetic, mechanical, etc.) into electricity.

The combination of different factors, such as a growing global population and digitalization, have forced industrial activity and power demand to boom in order to continue to meet society's needs. In that way, one of the challenges we face in the energy industry is efficiently guaranteeing the production and supply of sustainable and environmentally-friendly electricity to citizens.

Let's begin with the fact that many resources on our planet are limited, so the various types of renewable energy (solar, wind, hydropower etc.) are increasingly more important.

The energy transition is the primary tool that companies, governments, and citizens possess for producing, distributing, and consuming energy, while reducing greenhouse gas (GHG) emissions. We're progressing toward a decarbonized economy in which energy efficiency and renewable energy play a fundamental role in slowing climate change.

How is electricity generated and distributed?

Have you ever wondered how power arrives to your home? Electricity passes through various points starting from where it is generated all the way until you press the light switch.

The process of electricity generation:

1. Obtaining energy from various primary sources

Electricity is a secondary energy source, therefore it must be produced from a primary source of energy, that is, from naturally-present resources.

There are two ways of obtaining electricity:

  • From renewable primary energy sources, such as the wind, solar radiation, or ocean waves.
  • Or from non-renewable primary energy sources, such as coal, natural gas, petroleum, or nuclear energy.

2. Transforming energy into electricity

Once the energy is obtained, it is converted into electricity and transmitted from an electrical plant to an electrical substation.

Electrical substations are fundamental for preparing electricity and guaranteeing proper voltage. The largest are located in the outskirts of cities, whereas much smaller ones can be located inside a building.

3. Distributing electricity

The distributor is in charge of sending electricity from the substation to homes.

The various distributors have set up the proper infrastructure to transport and distribute energy, and are tasked with maintaining it in good conditions. They're also responsible for electricity meters, and therefore, also for sending meter readings to the retailer. Consumers cannot choose their distributor; it's assigned based on location, but they may choose their retailer.

4. Selling electricity

The power retailer is the company with which the consumer contracts their electricity supply.

This company purchases energy from power generation companies and sells it to users, so that they may have electricity in their homes. It's also in charge of sending bills. Power can be sold and contracted in two ways:

  • Free market: according to specified conditions agreed to in a contract between the company and the user.
  • Regulated market: according to a system designed by the Government.

Main types of power generation today

Have you every wondered how electricity is generated? Depending on nature's capacity for generating each resource, energy sources can be classified as either renewable or non-renewable.

What types of renewable power generation are there?

man from electricity company reviewing solar panels

Solar energy

Solar energy is obtained from sun radiation in the form of light, heat, and ultraviolet rays. And although they both are produced at solar plants, there are two different types: 

  • Photovoltaic solar energy, which transforms sunlight into electrcity using photovoltaic panels.
  • Solar thermal energy, which transforms the heat from the sun into electricity using solar thermal collectors.
woman walking with her bike through a field of grains with wind turbines in background

Wind energy

Wind energy is transformed into electricity through a wind turbine. Depending on the location of the wind farm, there are two types:

  • Onshore wind energy, located on land.
  • Offshore wind energy, located in the ocean.
Offshore wind turbines

Offshore wind energy

It involves harnessing wind energy at sea to produce electricity through an installation of offshore wind turbines by anchoring them to the bottom of the sea or by using more modern and less invasive floating systems, which is increasingly more common.

Water flowing from a dam


Hydropower harnesses the force of moving water to convert it into electricity in hydropower plants. There are three type of these plants:

  • Storage hydropower plants use a large reservoir of a certain volume by means of a dam.
  • Run-of-river hydropower plants capture part of the water flowing in a river and diverts it towards the turbines in the plant.
  • Centrales hidroeléctricas reversibles o de bombeo, que pueden transformar la energía del agua en electricidad, y a la inversa.
  • Pumped-storage hydropower plants can convert the energy from the water into electricity and the other way around.

Geothermal energy

Geothermal energy is the heat within the Earth that can be used to generate electricity, but it can only be harnessed in locations with specific physical conditions such as hot springs, geysers, or volcanoes.

Other ways of generating power

There are other ways to generate power although they're not as conventional. These are some examples: