Establishing Steam Power and being able to run electric machines is very important. This is really when you start getting into the meat of the game. Having access to Electric Miners and Assembling Machines and many other electric machines is what will allow you to truly start automating things and discover what the Factorio is really about!
Now getting your first power setup going can be a bit complicated and confusing if you haven't done it before and don't know certain information and little nuances involved in the process.
The Steam Engines work pretty much like how an old steam engine train worked back in the day. The Boilers, which go in front of the engines heat the water sent to them from the pump and then send it into the Steam Engines. Once the water enters the engines, the steam is created, which creates pressure to push the pistons up and down (seen at the top of steam engines), which then turns some arms and gears to actually get the power generator moving. Obviously this is a very basic explanation of how it works, but in general that is what's going on. Now that we understand how it actually creates the power, let's get into the set up for this!
So first thing first, you will need three essential items to get a basic Steam Engine setup running. Four items if you include pipes, which are technically optional but I would highly suggest using. You will need an Offshore Pump, some Boilers, and of course the most important thing, some Steam Engines. Now before you run off and start crafting some odd number of each of these things, there are some important ratios to keep in mind if you want to have efficient power generation.
The standard rule is 1-13-10. What does that mean? Well it stands for one Pump, 13 Boilers, and ten Steam Engines. Having this number of each in your setup will run the whole thing at 99% efficiency. Personally I prefer 14 boilers because that bumps it up to 100% efficiency which I like better, but it isn't required by any means. It is best to build separated power "units" with this ratio. What I mean by this is that when your first 10 steam engines are no longer enough to run your whole factory, don't just add on to your current setup by multiplying everything by two. To word it another way, don't just add another Pump, 13 more Boilers to the existing ones, and 10 more Steam Engines to the end of the current ones. Doing this will mess things up and make your steam engines very inefficient. So it is best to just mirror the setup and put it close to your current one and make sure they are all connected to your power grid.
Some of the most popular ways of setting this up is to just put your ten Steam Engines in a row as a long line, or build two lines with five engines in each and connect them with some pipes. Here are some examples of what each of those might look like:
In the above example you can see there is an Offshore Pump connected to 13 Boilers via an underground pipe so you can walk between the Pump and Boilers. This is an example of a setup using ten steam engines in a straight line rather than side by side. The advantage to this is that it is skinnier, but the disadvantage is obviously that it is quite long.
This example illustrates a setup where the Steam Engines are placed side by side with 5 on each side. There are still ten Steam Engines in total, but they are just in a different format. This setup pretty much has the opposite advantages and disadvantages as the one above. Also notice that there is a pipe connecting the boilers to the Steam Engines, where the blue arrow is pointing. In the first setup with them all in a line, we did a direct connection because there was no use for a pipe in between the boilers and engines. However when you do it side by side, you have to space the engines out from the boilers by one tile and use some pipe to connect them all up.
One last note about this in regards to using pipes. As I mentioned above, pipes are not technically necessary for the whole thing to work, because you can just directly connect everything together one after the other, but pipes make it much cleaner. As you may have guessed, you can't walk through structures in Factorio, so creating a huge line of a Pump, Boilers and Steam Engines will pretty much just act as a wall you have to walk around if you don't use pipes. To fix this, I like to just run an underground pipe from the pump to the first boiler. All the boilers and steam engines can still be directly connected to each other and not really cause a problem for you running through if you have that underground pipe there. Here is an example of what I mean:
That almost covers everything in regards to getting your power up and running. There are just a few more things I would like to go over quickly before we move on to the next section!
The first thing is making sure the boilers are automatically fueled so you don't have to keep running over to them to manually put fuel in. This is pretty straight forward, as you just need to run a belt of coal up to them and then have an Inserter at each boiler to pull the coal off the belt. Again, this is pretty self-explanatory since running the belt over there is simple enough, and setting up the Inserters is pretty straight forward.
The second thing to keep in mind that may not initially be obvious is that the Steam Engines will only generate as much power as is currently needed. So for example, if you have a 10 engine setup it can produce a maximum of about 5.1MW of power, but if your factory only requires 2MW at the moment, then the engines will only generate that much. They won't run full blast all the time unless you actually need that much power.
You can tell how much power is being used in comparison to the max performance possible by mousing over a Steam Engine. The following picture illustrates what that looks like:
The bar that says Available Performance indicates the maximum amount of power it can generate. You can see that bar is full which means the Steam Engine is working perfectly since it is currently capable of producing the max power it is rated for. The first bar which just says Performance is how much power it is currently producing. So this just means that only about ¾ of the max power is currently needed, so the engine is only creating that much. until you actually connect something to the power grid that requires power. Here is a picture of what will probably be flashing over the Steam Engines before you hook any machines up to the power grid:
The little yellow triangle with a "no power" sign in the middle can be very confusing at first. That flashing symbol actually means that there is nothing connected to the Steam Engines that actually require power. So if you see this symbol flashing over your engines just hook something up to the power grid, like a miner for example, or even just powering your inserters feeding the boilers will work (and is probably the first thing you should power anyway).
Once you have something draining power from the Steam Engines, the warning symbol should go away. I just wanted to point this out because I know it confuses a lot of new players and definitely caught me off guard the first time I played the game.
So now that everything is working properly, you can mouse over a Steam Engine as explained above to see how much power drain is on that engine You can also click on any power pole that is part of the power grid and get a detailed breakdown of how much is being used, and what specifically is taking power at that moment etc.