How do electricity transmission losses affect decisions between centralized and distributed energy systems?

• A. Losses incentivize distributed generation closer to demand, reducing the economics of long-distance grids.
• B. Losses have no impact on system design.
• C. Losses only matter for offshore wind.
• D. Losses make centralized systems always more economical.

Answer: (A)

Transmission losses come from resistance in the lines, so the energy wasted as heat grows with the distance electricity travels and the current in the lines. Delivering power from a distant central plant means you must push a large current through long feeders, and a chunk of that energy never reaches customers. That makes long-distance transmission more costly and less efficient. When those losses are a significant part of the system’s costs, it’s economically sensible to generate closer to where people use electricity or to rely on distributed energy resources and microgrids that serve local demand. By producing power near where it’s consumed, you reduce both the current and the distance electricity must travel, cutting losses and lowering overall costs, which often improves reliability and reduces the need for massive long-distance transmission infrastructure. While offshore wind or other renewables do involve transmission to shore, the same principle applies: shorter, localized generation helps minimize losses. This is why higher transmission losses encourage distributed generation near demand rather than relying solely on centralized plants with long transmission routes.