They moved fast, spent big, and electrified everyone.
Over Thanksgiving, I discovered grid gold. We were visiting Nevada City, an old mining town in the Sierras that’s like a time capsule of the 1800s.
At the center of town is a gigantic cast iron wheel. It’s the only clue that this was the birthplace of the modern grid – a story I had no idea about.
It was here, in 1896, that a few scrappy Californians went on a crazy-fast $100 million building spree to create the world’s biggest and most high-tech grid, from scratch.
Here’s how they did it.
Re-inventing the wheel.
The wheel on display in Nevada City dates from 1928, and has some awesome specs. It’s twelve feet high, weighs fifteen tons, and could generate 18,000 horsepower at 257 RPM. That’s thirteen megawatts. THIRTEEN MEGAWATTS!!! The thing is cast iron and looks too heavy to even move, but it generated as much power as 26,000 solar panels today.
Lester Pelton showed up in California in 1850 to try his hand at gold mining. It was a different place back then. There were 10,000 grizzly bears in the state, and only 90,000 people (mostly in San Francisco and Gold Country).
Pelton failed at mining, but became a fisherman and then a carpenter. Eventually he studied mining equipment and the problems with powering it. Wood-fired steam boilers were used in those days (for dredging, processing ore etc). But wood was expensive. Using water power wasn’t practical because the mountain streams were too shallow.
Pelton started tinkering, and by the 1870s he had reinvented the water wheel. His ‘double cup’ design harnessed the water’s kinetic energy over 90% efficiently, compared to 40-60% for existing wheels. And it worked in shallow mountain streams! Here’s a cool YouTube simulation showing the high-efficiency fluid dynamics of Pelton’s design:
Pelton started making his wheels at a foundry in Nevada City in 1879, patented them in 1880, and they were soon providing power to mines all over Gold Country. Within a few years, they’d become the go-to technology for hydropower around the world.
Unbelievably, there are still hundreds of Pelton wheels in operation on grids today, in the U.S., Switzerland, Italy, India, China, Chile, New Zealand and more countries. His design has never been surpassed for so-called ‘high head, low flow’ hydroelectric applications (high head means steep water drops).
The global race to electrify.
By the 1880s, lots of people were thinking big about electricity. Pelton’s wheels were powering Gold Country mines, but there wasn’t an electric grid in California (or anywhere). And in cities, electricity demand was growing quickly, for lighting and other uses.
Without a grid to bring power from distant sources, electricity was produced by burning coal in local neighborhood plants. The coal generated heat to power reciprocating steam engines, which drove dynamos to generate electricity (DC or direct current, the standard at the time).
San Francisco had the first coal-fired electric plant in the country, in 1879 (at 4th and Market), beating Thomas Edison’s famous NYC Pearl Street Station by three years. But the Pearl Street plant got all the attention, like this Scientific American article. Pearl Street actually burned down in 1890, highlighting one problem with this model (coal plants were also dirty and smelly). But the big issue was that these coal plants just didn’t scale.
Direct current (DC) electricity could only travel about a half mile, so lots of coal-fired plants were needed for each city. And their operating costs were way too high. Each plant required hundreds of tons of coal per month plus lots of labor (stokers, firemen, boiler attendants) and maintenance. As demand exploded, so did cost.
The Californians start building their grid.
Back in Nevada City, two entrepreneurs were thinking big: John Martin and Eugene de Sabla.
On the East Coast, AC (alternating current) technology had begun enabling electricity to travel much longer distances, and was starting to win the war of the currents.
Martin and de Sabla realized that with AC transmission, Pelton’s wheels could power a lot more than mines. They convinced investor Romulus Riggs Colgate (heir to the soap fortune) to fund an AC power station on the South Yuba River to provide electricity to Nevada City.
This ‘Rome’ power station came online in 1896 (after some difficulties), generating 5500 volts, which was stepped down to 1000 volts (needed for arc lighting) at a substation near Nevada City.
How do I know this? Because I found the substation!
We were hiking along Deer Creek over Thanksgiving and I came across this old stone building which looked suspiciously utility-like. A neighbor confirmed it was an old PG&E building, from 1896, which has now been turned into… an AirBNB. It has heat pump HVAC and an induction range…. I need to stay there!
Martin and de Sabla’s land grabbing, world-beating, grid-building decade.
After the success of their 1896 Nevada City project, Martin and de Sabla went on a tear, raising tons of money and building the world’s largest and most modern grid within a decade.
What enabled them to win was their Gold Country DNA. They knew lots of rich people. They understood hydropower and the latest electric technology. They knew the local Gold Country land and water rights situation… so they knew what to buy. And they knew the power of amassing capital and rolling up assets and getting lots of stakeholders behind them.
With holding companies like California Gas and Electric and Bay Counties Power Co., they began acquiring competitors, plus water companies and defunct mining companies for their land and water rights.
de Sabla was the sales guy and fund-raiser, working with East Coast investment banks and old San Francisco money (like the Crockers). In total he raised about $60 million in debt (bonds with power plants as collateral) via bankers, plus another $10-30 million in equity. In today’s dollars, this would have been several billion total. They also did a lot of acquisitions for stock, so ended up with a California who’s who of equity holders.
Martin was the operations guy and tech visionary. With money in hand, he started building state-of-the-art power plants (with Pelton wheels) in the Sierra foothills, and transmission lines like there was no tomorrow.
Martin pushed the technology boundaries as far as he could, like upping transmission to 60,000 volts from the previous 33,000 volt standard. And he solved major logistical problems like putting a power line across the half-mile Carquinez Strait in 1901, the first-ever high voltage crossing of a big river.
That line, linking the Gold Country hydro plants to Oakland was the first high voltage line in the world to break the hundred-mile barrier.
In 1905, their grid mostly built, Martin and de Sabla renamed their companies… (drum roll): Pacific Gas and Electric.
The largest, most modern grid in the world.
Then the 1906 earthquake hit, and it took until 1911 to rebuild. At which point, PG&E’s grid was arguably the largest and most modern in the world.
It spanned 38,000 square miles across 30 counties and operated 1,200 miles of 60,000 volt AC transmission… far bigger in scope than denser urban utilities with similar generating capacities like Chicago’s or Buffalo’s or New York’s or Berlin’s. Its ten hydro plants boasted sixty-seven megawatts of combined capacity, and were capable of generating 280 gigawatt-hours of hydroelectric power per year (which could be boosted to 400 gigawatt hours by the company’s auxiliary steam plants).
But the system’s design was its real magic. Martin had chosen an integrated, networked power plant model, where plants could dial up or down as needed and back each other up. This was somewhat out of necessity (power could rise or fall at each hydro plant due to water flows), but became the design template for all future modern grids.
The grid kept supply and demand in balance via a telephone network of operators at its key facilities. Here’s a description of this from ‘Electrical World‘ in 1912 (underlining is mine):
With PG&Es system fully in place by 1911, cheap hydropower flowed and electricity use in San Francisco and nearby cities exploded. Electric streetcars took off. Electric streetlights went up everywhere (the city installed it’s famous ‘Path of Gold’ streetlights down Market Street in 1911). The Union Iron Works installed electric traveling cranes and hoists (to replace steam ones). The docks started using electric winches. And newspapers started using electric motors for their linotype machines.
Statewide, electric power delivery jumped from 93 gigawatt hours in 1902 to 228 gigawatt hours in 1912 (U.S. Census), most of which was probably PG&E and Northern California.
By the time of the Panama-Pacific International Expo in 1915, PG&E was feeling flush enough to blanket the city with 80,000 colored bulbs and searchlights.
Pretty cool story, huh? And I didn’t even mention that up to this point, because of all the hydro, PG&E’s grid was almost 100% clean! Except for the gas businesses they’d acquired, which at this point were making gas by superheating coal… but that’s another story.
It’s worth noting that PG&E post-1906 has a much more checkered history. Like investing heavily in gas, failing to adequately maintain that infrastructure, and causing explosions and deaths. Contaminating groundwater with cancer-causing chemicals and then trying to deny it. Failing to upgrade century-old power lines which then caused wildfires and deaths. Generally using its monopoly power to enrich shareholders at the expense of rate payers. Multiple bankruptcies. Fighting rooftop solar and distributed energy. The list goes on.
But electrifying California between 1896 and 1905? That was amazing!
Epilogue.
Martin and de Sabla’s timing was great, and they made all the right moves. They lined up the right investors and raised an enormous amount of capital. They acquired the right assets, building a vertically integrated network, including generation, transmission, and retail. It had scale, efficiency, and the latest AC technology. And they put it all together, impressively, in just a single decade.
Lester Pelton declined to run the Pelton Water Wheel company, preferring a quieter life as a hydropower consultant and philanthropist until his death at age 78 in 1908. He didn’t live to see the full 20th century dominance of his invention, but did travel to Europe to see some big Pelton wheel installations in progress. He was not associated with PG&E.
Eugene de Sabla stayed involved in PG&E management until 1911 and then retired, becoming an investor, philanthropist, and well-dressed man about town. He died in 1956 at aged 91, with a net worth was estimated at $3-6 million in PG&E stock and real estate ($40-80 million in today’s dollars).
John Martin ran PG&E from 1906 to the late 1930’s (as President, GM and Board Chairman), and remained one of the most influential utility executives until his death in 1951. He dramatically expanded PG&E’s scope, consolidating more competitors, building out more hydro systems and dams, the AC distribution grid, and helping to develop and respond to government utility regulation. He was also a philanthropist and advisor to utilities in Europe. His net worth at its peak in the 1920s was estimated at between $3-10 million ($60-200 million in today’s dollars).
What all three men had in common was Nevada City and their Gold Country DNA.
Wish we could bring them back to see today’s grid… maybe they’d have some ideas for improving it?
