In the early 1880s, Westinghouse's interest in railroad switching and natural gas distribution led him to become involved in the then-new field of electrical power distribution. Electric lighting of streets using
arc lighting was already a growing business with many companies building systems powered by either locally generated
direct current (DC) or
alternating current (AC). At the same time,
Thomas Edison was launching the first DC electric
utility designed to light homes and businesses with his patented
incandescent bulb. In 1884, Westinghouse began developing his own DC domestic lighting system and hired
physicist William Stanley to help work on it. In 1885, Westinghouse became aware of the concept of an
electrical transformer introduced by Frenchman Lucien Gaulard and Englishman John Gibbs. Westinghouse was alerted by Guido Pantaleoni, an Italian engineer in his employ, to the already-patented Gaulard-Gibbs transformer design, and to an already deployed system capable of transmitting electricity for many miles near London, Turin, and Rome. They had found that AC electricity could be "stepped up" in voltage by a transformer for transmission and then "stepped down" by another transformer for lower voltage consumer use. This innovation made it possible for large centralized power plants to generate electricity and supply it over long distances to both cities and places with more dispersed populations. This was a huge advantage over the low voltage DC systems being marketed by
Edison’s electric utility, which limited generating stations to a transmission range of about a mile due to losses caused by the low voltages and high currents used. Westinghouse recognized AC's potential to achieve greater
economies of scale as a way to create a truly competitive electrical system, rather than simply piecing together a barely competitive DC lighting system just different enough to get around Edison’s patents. In 1885, Westinghouse imported several Gaulard–Gibbs transformers and a
Siemens AC
generator to begin experimenting with AC networks in
Pittsburgh. Stanley, assisted by engineers Albert Schmid and
Oliver B. Shallenberger, dramatically improved the Gaulard–Gibbs transformer design, creating the first practical and manufacturable transformer. In 1886, with Westinghouse's backing, Stanley installed the first multiple-voltage AC power system in
Great Barrington, Massachusetts. The demonstration lighting system was driven by a
hydroelectric generator that produced 500 volts AC, which was then stepped down to 100 volts to light incandescent bulbs in homes and businesses. That same year, Westinghouse founded the "
Westinghouse Electric & Manufacturing Company"; in 1889 he renamed it the "Westinghouse Electric Corporation".
War of the currents The Westinghouse company installed thirty more AC-lighting systems within a year, and by the end of 1887 it had 68 alternating current power stations compared to 121 DC-based stations Edison had installed over seven years. This competition with Edison led, in the late 1880s, to what became known as the "
war of currents". Thomas Edison and his company joined and promoted a spreading public perception that the high voltages used in AC distribution were unsafe and deadly. Edison even suggested that a Westinghouse AC generator should be used in the State of New York's new
electric chair. Westinghouse also had to deal with another AC rival, the
Thomson-Houston Electric Company, which had constructed 22 power stations by the end of 1887 Edison General Electric company was merged with the Thomson-Houston Electric Company to form
General Electric, a conglomerate controlled by the board of Thomson-Houston.
Development and competition During this period, Westinghouse continued to pour money and engineering resources into the goal of building a completely integrated AC system — obtaining the Sawyer–Man lamp by buying Consolidated Electric Light, and developing components such as an
induction meter, and obtaining the rights to inventor
Nikola Tesla's brushless AC
induction motor along with patents for a new type of electric power distribution,
polyphase alternating current. The acquisition of a feasible AC motor gave Westinghouse a key patented element for his system, but the financial strain of buying up patents and hiring the engineers needed to build it meant that the development of Tesla's motor had to be put on hold for a while. In 1891, Westinghouse's company was in trouble. The near collapse of
Barings Bank in London triggered the
financial panic of 1890, causing investors to call in their loans. The sudden cash shortage forced the company to refinance its debts. The new lead lenders demanded that Westinghouse cut back on what looked to them like his excessive spending on the acquisition of other companies, research, and patents. Also in 1891, Westinghouse built a hydroelectric AC power plant, the
Ames Hydroelectric Generating Plant near Ophir, Colorado which supplied AC power to the Gold King Mine 3.5 miles away. This was the first successful demonstration of long-distance transmission of industrial-grade alternating current power and utilized two 100 hp Westinghouse alternators, one working as a generator producing 3,000-volt, 133-Hertz, single-phase AC, and the other used as an AC motor. In May 1892, Westinghouse Electric won the bid to power and illuminate the 1893
World's Columbian Exposition in Chicago with alternating current, substantially underbidding General Electric to get the contract. To meet the contract's demands, he had to quickly develop a new type of incandescent lightbulb based on the
Sawyer–Man patent he had obtained, ensuring it did not infringe on the Edison patent design. By the beginning of 1893, Westinghouse engineer
Benjamin Lamme had made great progress in developing an efficient version of Tesla's induction motor. In that work he was aided by his sister and fellow Westinghouse engineer
Bertha Lamme Feicht. Westinghouse Electric started branding their complete
polyphase AC system as the "Tesla Polyphase System", announcing Tesla's patents gave them
patent priority over other AC systems and stating their intention to sue any patent infringers. This
World's Fair devoted a building to electrical exhibits. It was a key event in the history of AC power, as Westinghouse demonstrated the safety, reliability, and efficiency of a fully integrated alternating current system to the American public. Westinghouse's demonstration of their ability to build a complete AC system at the Columbian Exposition was instrumental in the company getting the contract for building a two-phase AC generating system, the
Adams Power Plant, at Niagara Falls, NY, in 1895. The company was subcontracted to build ten 5,000 horsepower (3,700 kW) 25 Hz AC generators at this plant. Westinghouse's Niagara Power Station No. 1, as it was then called, remained in operation in the Niagara transformer house until the plant closed in 1961. At the same time, a contract to build the three-phase AC distribution system the project needed was awarded to General Electric. The early to mid-1890s saw General Electric, backed by financier
J. P. Morgan, engaged in costly takeover attempts and patent battles with Westinghouse Electric. The competition was so costly that in 1896 a patent-sharing agreement was signed between the two companies. The agreement stayed in effect until 1911. Following the success of the first Niagara Falls plant, the
Rankine Generating Station, also known as The Canadian Niagara Power Generating Station, the Canadians contracted with Westinghouse for eleven 25 Hertz generators of the same Tesla-inspired design, rated for a total generating capacity of 100 MW. That facility opened in 1905 in Niagara Falls, Ontario. ==Other Westinghouse projects: steam engines, maritime propulsion, and shock absorbers==