So HN, anyone with more electrical knowledge than I know why this doesn't work or why it wouldn't scale or any other engineering challenges that have kept this from being more than a pipe dream?
Generally electricity only arcs once, and it requires 30kV/cm. This means to arc to two things at 10 cm you require about 600kV, but again this requires a small amount of energy to be transferred to ground.
Transferring through the ionosphere would likely resolve some of this problem, it's like dipping electrodes into salt water. It works, it's just omni-directional and subject to the environment. However, you basically have to build every antenna 50km high.
The technology I believe is credible, but the practicality of it isn't very high. Below the ionosphere this technology has the problem that the ground is usually much closer than the next persons house. This would work great above 100 ft, due to the fact that the whole ozone production would poison most people. Above 100 ft, I can only transmit power in a range of less than 100 ft, but generally only to one person. If I want to transmit to two people it has to be below 50 ft.
At 100 ft the voltage limit is 90 million volts before you're arcing directly to the ground. The safe limit would probably be 45 million volts as you'd be arcing to peoples heads at 90 million volts.
Basically how the system would end up breaking down is that you'd use hundreds of feet of cable to connect to your antenna, which we currently use less to connect to the one down the road. I believe mine is about 30 feet away. The substation would require a few thousand feet or so of cable to connect to the main transformer, again which we use considerably less to do today.
So the only practical usage I see is on the long distance scale, where you're using the ionosphere instead of arcing through the air. However, it would all have to be over 100km apart. Yet at such extremely high voltages to be practical we wouldn't have a strong enough insulator to stop the arcing anyway.
Unless we end up with like 2 power stations in North America and a super electrical insulator, I doubt this technology would ever become truly practical.
There are a few major reasons that this doesn't scale, but the big one is the inverse square law. The efficiency of the system is inversely proportional to the square of the distance between the user and the tower, whereas the efficiency of wires is inversely proportional to only the length of the wire.