Distributed Generation in Liberalised Electricity Markets

International Energy Agency

Electric power in OECD countries is mostly produced by large central generating stations, then transmitted along high voltage lines to local distribution systems that carry it to final consumers. Distributed generation plants are different. They produce power on an electricity consumer’s own site or at the local distribution substation and can supply power directly to the customer or to the local distribution network. Distributed generation technologies include engines, small turbines, fuel cells, and photovoltaic systems.

Distributed generation technologies are already having a large impact, particularly for high- reliability applications, as a source of emergency capacity or as a way of deferring the expansion of a local network. In some markets, these plants are displacing more costly grid electricity. Globally, more capacity for distributed generation was ordered in 2000 than for nuclear power.

This book provides a guide to energy policy makers on this growing phenomenon. It surveys the current situation and market status of distributed generation in selected OECD countries, including the impact of current energy policies.