Grid-connected centralised systems perform the functions of centralized power stations. The power supplied by such a system is not associated with a particular electricity customer, and the system is not located to specifically perform functions on the electricity network other than the supply of bulk power, whilst functioning independent from nearby developments. South Africa – similar to most developed countries in the world in the past – operate on a model of centralised, state-owned power plants, which are co-located with major sources of fuel, in our case fossil-fuel. The reason for this was that the low cost of generating electricity along with the economic efficiency gains from being positioned closer to the fuel source outweighed the economic inefficiencies of transmission losses from transporting power over long distances to urban and industrial areas, as well as mines, This model is slowly changing, with the additions of renewable energy sources in a decentralised manner, where the energy generated are closer to the end user, as seen more recently. Globally, decentralised grids offer energy security such that these networks are less vulnerable to terrorist attacks.
Figure: Three phases of power system evolution [GE, 2014]