In Medieval Times there were three prevailing theories about the source of the aurora. The theories were presented in a chronicle called The Kings Mirror by an unknown Viking scholar in 1250 AD. :

The lights "shine forth from the fires that encircle the outer oceans" of the globe.

Stray beams of gleams of sunlight that slipped past the curve of the earth and beamed into the night sky. 

The intense cold of the arctic "frost" and "glaciers" are themselves the source of the auroras radiance.

In 1896 Kristian Birkeland theorized that steams of cathode rays (or electrons, as they were soon to be known) were emitted from sunspots and flooded through space to earth. He thought that perhaps these outpourings of electrons were ultimately caught by the earth's magnetic fields and directed towards the poles. Then as the electrons flowed through the thin air of the earth's upper atmosphere, they would cause the gases present there to glow. Hi ideas were rejected at the time but in 1970 Hannes Alfv'en received The Nobel Prize for proving  Birkeland correct.

The aurora is never absent from the earth. It is here constantly but is usually found only in the polar regions of the earth, both northern and southern. Daylight renders the aurora invisible but fortunately during some nights the aurora expands beyond the polar regions and can be seen at lower latitudes.

For more reading on this topic try the excellent book "Aurora The Mysterious Northern Lights" by: 
Candace Savage
GREYSTONE BOOKS 
Douglas & McIntye 
Vancouver/Toronto 
1995 
ISBN 1-55054-447-0