Engineers design transmission networks to transport the energy as efficiently as feasible, while at the same time taking into account economic factors, network safety and redundancy. These networks use components such as power lines, cables, circuit breakers, switches and transformers. The transmission network is usually administered on a regional basis by an entity such as a regional transmission organization or transmission system operator.

Transmission efficiency is greatly improved by devices that increase the voltage (and thereby proportionately reduce the current), in the line conductors, thus allowing power to be transmitted with acceptable losses. The reduced current flowing through the line reduces the heating losses in the conductors. According to Joule's Law, energy losses are directly proportional to the square of the current. Thus, reducing the current by a factor of two will lower the energy lost to conductor resistance by a factor of four for any given size of conductor.

The optimum size of a conductor for a given voltage and current can be estimated by Kelvin's law for conductor size, which states that the size is at its optimum when the annual cost of energy wasted in the resistance is equal to the annual capital charges of providing the conductor. At times of lower interest rates, Kelvin's law indicates that thicker wires are optimal; while, when metals are expensive, thinner conductors are indicated: however, power lines are designed for long-term use, so Kelvin's law has to be used in conjunction with long-term estimates of the price of copper and aluminum as well as interest rates for capital.

The increase in voltage is achieved in AC circuits by using a step-up transformer. HVDC systems require relatively costly conversion equipment which may be economically justified for particular projects such as submarine cables and longer distance high capacity point-to-point transmission. HVDC is necessary for the import and export of energy between grid systems that are not synchronized with each other.

A transmission grid is a network of power stations, transmission lines, and substations. Energy is usually transmitted within a grid with three-phase AC. Single-phase AC is used only for distribution to end users since it is not usable for large polyphase induction motors. In the 19th century, two-phase transmission was used but required either four wires or three wires with unequal currents. Higher order phase systems require more than three wires, but deliver little or no benefit.

The price of electric power station capacity is high, and electric demand is variable, so it is often cheaper to import some portion of the needed power than to generate it locally. Because loads are often regionally correlated (hot weather in the Southwest portion of the US might cause many people to use air conditioners), electric power often comes from distant sources. Because of the economic benefits of load sharing between regions, wide area transmission grids now span countries and even continents. The web of interconnections between power producers and consumers should enable power to flow, even if some links are inoperative.

The unvarying (or slowly varying over many hours) portion of the electric demand is known as the base load and is generally served by large facilities (which are more efficient due to economies of scale) with fixed costs for fuel and operation. Such facilities are nuclear, coal-fired or hydroelectric, while other energy sources such as concentrated solar thermal and geothermal power have the potential to provide base load power. Renewable energy sources, such as solar photovoltaics, wind, wave, and tidal, are, due to their intermittency, not considered as supplying "base load" but will still add power to the grid. The remaining or 'peak' power demand, is supplied by peaking power plants, which are typically smaller, faster-responding, and higher cost sources, such as combined cycle or combustion turbine plants fueled by natural gas.

Long-distance transmission of electricity (hundreds of kilometers) is cheap and efficient, with costs of US$0.005–0.02 per kWh (compared to annual averaged large producer costs of US$0.01–0.025 per kWh, retail rates upwards of US$0.10 per kWh, and multiples of retail for instantaneous suppliers at unpredicted highest demand moments). Thus distant suppliers can be cheaper than local sources (e.g., New York often buys over 1000 MW of electricity from Canada). Multiple local sources (even if more expensive and infrequently used) can make the transmission grid more fault tolerant to weather and other disasters that can disconnect distant suppliers.

Long-distance transmission allows remote renewable energy resources to be used to displace fossil fuel consumption. Hydro and wind sources cannot be moved closer to populous cities, and solar costs are lowest in remote areas where local power needs are minimal. Connection costs alone can determine whether any particular renewable alternative is economically sensible. Costs can be prohibitive for transmission lines, but various proposals for massive infrastructure investment in high capacity, very long distance super grid transmission networks could be