Electrical power has two components, voltage and current.
Power = Voltage x Current
After power is generated at a power plant, its voltage is increased by a step-up transformer. The power then travels through transmission lines to a neighborhood where it will run homes, offices, and factories. But before entering the neighborhood, the power’s voltage is decreased by a step-down transformer.
But Why?
Why increase the power’s voltage only to decrease it later?
We want as much power generated by the plant to reach the neighborhood as possible, but we lose some power in the journey. As power travels through the lines, friction turns electrical energy into heat energy which is dissipated into the air surrounding the lines.
Useful (and billable) electrical energy turns into useless (and non-billable) heat energy. We minimize this waste by considering another equation.
Power Loss = Current Squared x Resistance, or (I^2)R
Power loss increases exponentially with current increase. Therefore, we want to keep our current as low as possible while not reducing the amount of power we transmit. As long as we increase the voltage by an amount proportional to the amount we decrease the current, we keep power at the same level.
Power = Voltage x Current
This is why we increase the power’s voltage at a step-up transformer before sending the power on its journey to the neighborhood. Increased voltage allows decreased current which dramatically reduces power loss. Once the power completes its journey, we decrease its voltage at a step-down transformer to make it safer and more useable in the neighborhood.
One More Thing
In addition to minimizing power loss, lower current allows power to be transmitted over thinner electrical lines, which are less expensive than thicker ones.
So, minimizing current saves money not only by minimizing power loss, but also by minimizing construction costs. This is why voltage is stepped up, only to be stepped down.