Electrical power is a key necessity for modern life, and must be provided in any city.
The electrical power used in most cities is not generated in those cities, but rather in outlying areas where land is cheaper, resources are closer, and community concerns about pollution are less important - though there are notable real-world exceptions, like the massive Ravenswood Generating Station in Queens. Most cities are instead powered through an electrical grid - and, in particular, most cities in OECD countries are connected to one of a handful of wide area synchronous grids, such as the synchronous grid of Continental Europe (which generates 10% of the world's electricity) or the Eastern Interconnection and Western Interconnection in the United States.
Transmission & Distribution
A power plant connects to a step-up substation, which increases the voltage up to the neighborhood of 110,000 volts so that the electricity can be transmitted over great distances with minimal losses. The electricity then travels over either high-voltage transmission lines (usually AC, sometimes HVDC for very long distances, underwater cables, or connections between different grids) to a distribution substation where the voltage is stepped down to more like 4,000 to 35,000 volts to be distributed to consumers. A typical distribution substation can handle about three megawatts, and serves about 1,500 residential homes at 2 kW each. Many distribution substations are outdoors, but others are enclosed in buildings, buried underground - or even camouflaged as houses. Smaller transformers located near the customers step the voltage down again to household levels. Many transmission and distribution lines are above ground, but, especially in cities, it's common for them to be buried underground. Distribution lines typically follow roads.
Funding & Ownership
Power networks can be privately or publicly owned. Public utilities may be operated at the national level or at the municipal level, or may be directly owned by the consumers. Private utilities are operated for profit, and is typically regulated by a public utilities commission to ensure that they meet certain requirements for rates and service.
From the early days of Sewer Socialism until the rise of neoliberalism in the 1980s, public utilities were the norm in much of the world. However, in recent decades the trend throughout the OECD has been towards privatization. In the US today, only 22% of electricity generation is produced by public utilities (including the federally-owned Tennessee Valley Authority, the sixth-largest utility in the country by capacity and by far the largest public utility). Indeed, some jurisdictions, notably Texas and Maryland, have not just privatized but also deregulated power generation, removing the power of their public utilities commissions to set electricity rates directly and trusting in the free market to set rates fairly. The ownership of power generation can therefore get quite complicated. In Maryland, for example, the 24 power plants with a capacity over 50 MW are owned and operated by 15 different public and private entities, including five major private energy companies, a Virginia-based cooperative utility, the town of Easton, a private equity firm, a private trash disposal company, a paper company, and the government of France.
Unlike power generation, though, where it makes some sense for multiple competing interests to exist, electricity transmission and distribution is almost universally considered a natural monopoly - the idea of two competing power lines owned by different companies both going from point A to point B is all but unimaginable in a modern power grid. Power grids may be built and owned by private enterprise or by public utilities, but in jurisdictions where an energy marketplace exists (most of them now) it's generally the case that the owners of transmission and distribution networks are required to share their networks. In the US, 80% of transmission lines are privately owned, but distribution lines are split just about 50/50 between private and public utilities.
Regardless of their ownership, essentially every utility charges end users a fee, which is typically somewhere around 12 to 13 cents per kilowatt-hour in the US. This goes to maintenance of existing generation, transmission, and distribution facilities, capital investment in new ones, and, for private enterprises, a profit on top.
In other city-builders
City-builder games have always included power plants, right back to the very first SimCity, and they've been a mandatory feature in almost every game in the genre (with the exception of the 2013 SimCity, which allowed players to buy excess power from other cities in the same region). The original SimCity had several possible power plants, all of which were the same size as a police station. When Cities: Skylines was released 26 years later, this remained the case - both a coal-powered plant and the police headquarters take up about half an acre in that game, which makes them smaller than a single (accurately scaled) wind turbine. In reality, of course, a typical thermal power plant can easily sprawl across tens or hundreds of acres. Additionally, the coal power plant in the game is a single tidy little building, without the surrounding coal piles, ash pools, and landfill sites a real plant would need. This lack of verisimilitude may seem like a minor detail, but land use is a major factor in the design and politics of power plant design. In Cities: Skylines, a coal power plant produces 0.02 megawatts per square meter, compared to a wind turbine's 0.003 MW/m^2. In reality, a typical coal plant requires 0.7 acres to produce one megawatt, or 0.0004 MW/m^2. It seems important that a game designed to simulate city design accurately depict the size of a power plant!
Finally, no city-builder game has yet explored one of the most important constraints in the design of power plants, particularly those that consume fossil fuels: the transportation of raw goods. A coal-fired plant can easily burn through the contents of 150 train cars every day; transporting that load by tractor-trailer, as games like Cities: Skylines do, would require more like 500 trucks a day, meaning a truck would need to arrive and be fully unloaded every 2.88 minutes. Unless it's right next to a mine, a coal plant of any significant size must be serviced by either train, ship, barge, or, in some unusual cases, pipeline. Natural gas and fuel oil burning plants also require far too much fuel to be practically transported by truck; typically they get their fuel via pipeline or by ship. Nuclear plants can get fuel delivered by truck - they only need about 30 tonnes of fuel on 4-5 truckloads per year, compared to a coal plant which may need 10,000 tonnes per day - but transporting the same amount of much more dangerous waste back out is somewhat more complicated, as the required containment casks must be larger and trucks have a very high accident rate, so rail and ship transport is often used. Furthermore, almost all thermal power plants require another key ingredient: water, millions of gallons of it per day. As such, most power plants are located on bodies of water. Water use can be reduced by plant design, but not eliminated. None of this is modeled in any city-builder I'm aware of.
Transmission & Distribution
In city-builder games like Cities: Skylines, there are no substations; high voltage transmission lines are connected directly from the power plant to neighborhoods. Powered buildings exude a sort of "aura" around them; any other building within this aura will also have power and will therefore create its own aura. (Presumably the incredibly high-voltage incoming electricity is simply arcing from building to building?) However, without mods, there is no power distribution along roads.
Funding & Ownership
City-builder games, of course, pretty much invariably assume full municipal ownership of all electrical generation, transmission, and distribution. They also assume that electrical power is provided free of charge to all consumers as a public good - or, at least, that the municipal power company must invariably operate at a loss. That said, the operations budgets of the municipal power plants must receive a heavy subsidy from somewhere, since the actual generation cost in Cities: Skylines ranges between ₡0.06 and ₡0.10 per megawatt-hour - a pretty sweet deal considering it's $50 to $100/MWh in the real world!
In Charm Cities
One of the key goals of the Charm Cities project is to present a more realistic view of the challenges of urban planning. This will involve making power network management simpler in some ways, since other city-builder games massively overstate the extent to which city governments directly run utilities, and more complicated in others, since municipalities that do run utilities must deal with much larger considerations than other games suggest.
One key element to this will be to make the construction of power plants entirely optional. The player will be able to simply plug their city directly into an existing regional power grid. The only thing they'll be responsible for is planning the city's distribution grid. This will come with some drawbacks - electricity prices will be higher for both HONs and city-owned buildings, and the player will have no control over the source of electricity, meaning that they could have a much larger carbon footprint.
Alternately, in a region where power generation is privatized, the player can issue permits for privately owned power plants. In this case, they'll plan the power plant, but won't pay for it. Again, electricity prices will be higher if they do this, and the player will have less control over which power plants are available to them. Private firms will make offers based on the city's population and economy and on the national conversations around pollution, climate change, and renewable energy; if coal is cheap because the national government is uninterested in funding renewables, private utilities will only be interested in constructing coal plants. A player may offer to subsidize a private generation station with city money or tax breaks to get more enticing power plant offers.
Finally, the player may have the option of founding a municipal power utility. This will give them complete control over both pricing and the source of power, and they may even turn a profit. However, they will be entirely responsible for managing the demands of their power plants, which will of course be significantly more complicated.
Planning out a power plant will involve more than plopping down a single building. A coal plant, for example, may require a harbor or train yard, a coal storage area, a water intake, one or more boiler units, a flue-gas desulfurization stack, a cooling tower, an emissions control system, an ash pool, a step-up substation, and more. For private power plants, the private utility will provide a list of buildings and the player will be responsible for placing them near each other to meet their needs. For public power plants, the player will have complete freedom to design their plant however they want to. Power plant sites will be large and free-form, like districts.
Transmission & Distribution
Players will connect transmission lines to link to the external grid and to any power plants in their city, then connect them up to substations inside their city. Roads will carry power lines by default; players will have the option to force them to be underground by road, by district, or throughout the city. Underground power lines will be more expensive.
Funding & Ownership
Construction and maintenance of private power plants will come at no cost to the player unless the player agrees to subsidize the private company to bring a desired kind of power into the city. Private utilities may be taxed in theory, but are more likely to move into the city if they're offered tax breaks. Construction and maintenance of public power plants will be covered by the player using income from the utility, but initial construction may be eligible for regional or national subsidies, based on the player's political capital.
The construction and maintenance cost of the distribution network will be determined by the percentage of power in use produced by the public utility; without a public utility, the electrical system will be free to build and maintain, but that cost will be passed on to consumers.