If you build your power plants close to your developement, power will be provided to the nearest buildings. What the developers overlooked, however, was that thes buildings now can produce power to other nearby buildings, and so forth, causing a chain reaction giving power to all buildings. This eliminates the need for power lines, which take up a large amount of space that could be used for buildings. It could be the difference between 20 residents and 2000. However, you will still need to build other power plants to sustain the developing city.