Sources of Energy and How It Actually Works

The Choose Energy Team
By The Choose Energy Team October 4th, 2015
For business

Energy is essential, yet taken for granted. You only remember it when the bill comes, or the lights are out and your iPad is at 7% battery with no WiFi.

Behind the scenes, energy powers everything. The heat, the lights, and the device you’re reading this on. At Choose Energy, we know our stuff and enjoy explaining it in plain English.

To start- the energy you use and pay for is comprised of two parts:

1) Electricity

2) Natural Gas

There are other forms of energy (like petroleum), but for we’re focusing on what affects your utility bills and how you can save on them.

Where energy comes from:

Energy is comprised of 2 “genres”, with 9 total sources of energy:

1) Non-renewable

There are 4 types of non-renewable energy: Coal, Natural Gas, Nuclear and Petroleum. Coal accounts for 37% of United State’s energy production, Natural Gas-30%, Nuclear-19% and Petroleum- 1% of US annual energy production.

Altogether, 87% of the US’s energy is produced from non-renewable resources.

2) Renewable

Hydropower is the largest renewable source of energy, totaling 7% of the US energy generation. Wind is the second most prominent source of renewable energy, representing 3.46%. Biomass, Geothermal and Solar weigh in at just under 2% of US energy generation.

We’re seeing an uptick in solar and wind. This is because states are implementing policies that require a certain amount of renewable energy consumption by a stated year (renewable portfolio standards).

How it gets to your home:

Electricity and Natural Gas operate in similar principles:

1) Generation

2) Flows through large-scale transmission systems (wires & pipelines) to Utility Station

3) Utility station takes in the energy and breaks it down to a smaller scale

4) It then flows through a smaller transmission system (wires & pipelines)

5) It enters your home at the correct amounts (voltage & pressure)


Starting in power-plants, energy flows through “high-voltage lines”. Then, it turns into manageable voltage, by entering a “substation”. It leaves the substation through “distribution lines” and separates into individual areas. Finally, it exits the distribution line through a transformer, where it is the proper voltage to enter your house and power the outlets.

Natural Gas

From shale beneath the ground, natural gas flows through a series of nearly 300,000 miles pipelines. The gas moves by altering the pressure in the pipes, it flows from high pressure to low pressure. It flows to a utility gas station, where the pressure is reduced so it can flow through a smaller grid of pipes. These smaller pipes are the “mains” that distribute the gas to service lines, which flow into your house.

How you pay for it:

Energy is a commodity and cannot yet be stored. There are no warehouses, tubs, or energy storage facilities, yet. As such, it is traded in energy markets.

Fundamentally, the power plants sell the energy they produce in 10 energy markets throughout the US. (CAISO, MISO, ISO-NE, NYISO, Northwest, PJM-ISO, Southeast, Southwest,  SPP and Texas (ERCOT), if you’re so inclined).

 So, the plants sell energy on the 10 US markets, and who buys it? The suppliers. (Confusing, right?). The suppliers purchase the energy contracts based on how much power they need to provide service to all customers.

The suppliers are integrated with the utilities, but do not actually touch the power. The energy flows from plant to utility station to home or business, without going through the suppliers (also called Power Marketers). The suppliers simply purchase the energy on the market, and bill through your local utility (typically, depending on suppliers and location).

Yes, you still have to pay your bill, but 15 states allow residents the option to pay less and select an energy plan. We’re here to make that possible, and help you choose an energy plan that benefits you.

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