Power Plants (as referred to by the Resistance) are series of gigantic, skyscraper-like, cylindrical towers located near the megacity of 01. As the name suggests, power plants generate electrical energy for 01's inhabitants, the Machines.
Each cylindrical tower contains up to hundreds of thousands of pods. Inside each pod is a human, connected through a series of grafts, plugs, and wires into the circuitry of the pod. Each human's mind exists in a shared dream—a neural-interactive virtual world known as the Matrix, fully convinced in almost all cases that they are alive, awake, and living on Earth around the turn of the 21st century.
Meanwhile, each pod generates biolelectric energy and neural processing power that, collectively and combined with nuclear fusion, is used by the Machines to power 01. According to early scripts from The Matrix, nuclear fusion was the primary power source of the Machines, while the minds of the pod-humans are also combined as a form of biocomputing Neural Network. Each human mind within the Matrix is also a subprocessor for the virtual world.
This information correlates to how Machines developed the Human characteristic of philosophy, and also correlates to the detrimental effects of Smith, a rogue Agent that infects both Programs and Bluepills alike to form copies of himself. Smith's viral behavior greatly disrupts the Matrix and the minds that form it, leaving it in an imminent computer crash before Neo stops Smith so that the Matrix can be reloaded.
Each pod is tended to by a Docbot, a Machine entity that ensures each human stays asleep and working properly. Each pod is connected to a waste chute. Many human bodies that have died are recycled into a gelatinous nutrient that is fed back to other pods.
In the case of some bodies (such as Redpills), the Docbot may be commanded to eject a human from the pod, where the body falls into the remains of the ancient sewers, conduits and other tunnels from the old, dilapidated human cities which cover the scarred surface of the Earth.
The early version of the power plant was created during the Machine war, in the form of a massive floating artillery platform with an attached pod and armed with energy weapons strong enough to vaporize the countless EMP tanks and Mecha deployed by the United Nations. It possessed a series of protruding antennae that served as a wireless energy transmission transferred to the nearby Machine army. It was created as an adaptation to Operation Dark Storm. Variants from the War era included a large cylinder where Prisoners of War, naked and tortured by Machine experimentation, are bounded into it side by side, to feed energy without being submerged into a pod, in a state of eternal punishment.