Steam wasn't the energy source, it was the working fluid. The energy source was coal, or later oil. Railroad companies recognized the utility of overhead electrification pretty much as soon as the technology was available, since you didn't need to carry around an entire steam engine and coal car, though nobody wanted to be the first to electrify their system. Diesel seemed like it would be a temporary stopgap in the transition to overhead electrification, but since it didn't need expensive railside infrastructure it basically became the default by the late 50s.