A substation is a part of an electrical generation, transmission, and distribution system. Substations transform voltage from high to low, or the reverse, or perform any of several other important functions. Between the generating station and the consumer, electric power may flow through several substations at different voltage levels. A substation may include transformers to change voltage levels between high transmission voltages and lower distribution voltages, or at the interconnection of two different transmission voltages. They are a common component of the infrastructure. There are 55,000 substations in the United States. Substations are also occasionally known in some countries as switchyards.

Substations may be owned and operated by an electrical utility, or may be owned by a large industrial or commercial customer. Generally substations are unattended, relying on SCADA for remote supervision and control.

The word substation comes from the days before the distribution system became a grid. As central generation stations became larger, smaller generating plants were converted to distribution stations, receiving their energy supply from a larger plant instead of using their own generators. The first substations were connected to only one power station, where the generators were housed, and were subsidiaries of that power station.

Substations may be designed and built by a contractor or alternately all phases of its development may be handled by the electrical utility. Most commonly, the utility does the engineering and procurement while hiring a contractor for actual construction. Major design constraints for construction of substations include land availability and cost, limitations on the construction period, transportation restrictions, and the need to get the substation running quickly. Prefabrication is a common way to reduce the construction cost. For connecting the new substation, a partial outage at another substation may be required, but the utility often tries to minimize downtime.

Substations typically serve at least one of the following purposes:

A transmission substation connects two or more transmission lines. The simplest case is where all transmission lines have the same voltage. In such cases, substation contains high-voltage switches that allow lines to be connected or isolated for fault clearance or maintenance. A transmission station may have transformers to convert between two transmission voltages, voltage control/power factor correction devices such as capacitors, reactors or static VAR compensators and equipment such as phase shifting transformers to control power flow between two adjacent power systems.

Transmission substations can range from simple to complex. A small "switching station" may be little more than a bus plus some circuit breakers. The largest transmission substations can cover a large area (several acres/hectares) with multiple voltage levels, many circuit breakers, and a large amount of protection and control equipment (voltage and current transformers, relays and SCADA systems). Modern substations may be implemented using international standards such as IEC Standard 61850.

A distribution substation transfers power from the transmission system to the distribution system of an area. It is uneconomical to directly connect electricity consumers to the main transmission network, unless they use large amounts of power, so the distribution station reduces voltage to a level suitable for local distribution.