Distributed generation

Distributed generation refers to small-scale power generation and storage technology which is connected to a distribution network rather than the transmission network. This briefing sheet aims to provide accurate and up to date information on small-scale distributed generation of less than 50MW.  

Home generated electricity
Home generated electricity

Small-scale Generation - General Points

Grid connected generation has been the standard for most power systems for many years. Electrical generators are connected to local, national, and international grids for a number of reasons:

  • Increasing the number of generators across a system enables demand to be shared between producers, increasing the reliability of generation
  • The requirement to keep generating sets in reserve can also be shared across the network, thereby reducing capital and operating costs
  • Large centralised power stations have traditionally had lower unit capital and operating costs than smaller stations. Larger stations needed to be connected to large systems in order to distribute the load to a larger number of consumers
  • Electricity can be traded between suppliers and consumers

Generating electricity from sustainable sources, i.e. renewable energy, is a key component of the Government’s energy policy. Renewables, such as onshore wind, photovoltaic and biomass tend to be of a size that better lends these projects to being connected to distribution networks, as opposed to transmission networks. Distributed generation is also of interest to power system planners because it offers the possibility of reducing system losses, as generation is geographically closer to the load. Operators of large distributed generation (i.e. more than 50MW) therefore avoid transmission losses, and pay reduced transmission use of system costs. If the operator can use distributed generation in a combined heat and power (CHP) mode, the significant improvements in overall efficiency can improve the economics substantially. 

If appropriate equipment is installed, distributed generation may be permitted to continue operation even in the event of network failure. This is known as islanding. The distributed generation can then be seen as a form of uninterruptible power supply. However, this is not common, as network operators need to be assured that the system can be operated safely under such circumstances.

Distributed generation will be one way of incrementally improving energy efficiency and so will also aid progress towards the target of CO2 reduction. However, many distributed generation projects have been installed for the motive of reducing energy costs, with no concern about reduction of total energy consumption – in fact, the distributed generation solution has been adopted to enable greater consumption at lower cost. Clearly this is not sustainable, but improved efficiency is welcome.

Getting Connected

It is illegal to connect a generator or other source of energy to the public networks, albeit it through the wiring of any domestic or commercial property, without meeting certain technical requirements. These requirements are contained in two key standards – Engineering Recommendation G59 and Engineering Recommendation G83 (both available for a fee from the Energy Networks Association). The latter deals exclusively with small scale generation of a rating less than 16A per (electrical) phase, and G59 covers all other distributed generation of any size that is to be connected to distribution (as opposed to transmission) networks.

All local Distribution Network Operators maintain simplified versions of the legal requirements on their websites, in a common Distributed Generation Connection Guide.

It is worth noting that the rules for getting connected are likely to change in the period 2015-18 as the UK progressively adopts European grid codes (these can be found at www.entsoe.eu/major-projects/network-code-development/Pages/default.aspx). The code with most effect on distributed generation will be the Network Code on Requirements for All Generators. It is expected that this will become law around the start of 2015 with a three-year implementation period.

Conventional Forms of Small-Scale Generation

Industrial and commercial users of power have used conventional generating sets for many years. In the 1970s, some process industries operated coal or heavy fuel oil fired steam turbines in a combined heat and power (CHP) role but this was only suitable for the larger industries with requirements greater than 50MW. Other alternatives were reciprocating engines, usually diesels burning fuel oil, or gas turbines operating in an open cycle mode, usually burning diesel oil or kerosene. 

The widespread use of natural gas fired gas turbines did not occur until the early 1990s. Open-cycle gas turbines could be used as peaking generation, to avoid peak prices for power imports from the grid, but were not sufficiently economic for continuous use. Combined cycle gas turbines have a substantially higher efficiency, especially in the CHP mode, and these became a natural choice for many industries and commercial users such as shopping centres, leisure centres and hospitals. Constant improvements in gas turbine technology mean that there are a range of operating sizes from the order of a few MW up to 50MW or more that can be used in either CHP or electricity only modes. 

Reciprocating engines, such as medium and low speed diesels, are also in widespread use throughout the world. Some are fitted with heat recovery, to improve overall efficiency by re-use of the exhaust heat. Reciprocating engines are familiar on construction sites in an auto-generation mode, where their higher operating costs are outweighed by the time delay and costs of connecting the site to a nearby grid. Reciprocating engines can be operated individually or connected into a microgrid. The latter arrangement requires synchronising equipment to bring the frequency of all generators into line.

Combined Heat and Power (CHP)

The technical and commercial efficiency of localised small-scale generation can be further increased if additional use is made of the heat generated in the process. Many industrial sites (chemical works, paper mills, food processing etc.) require heat (usually in the form of steam) as their primary energy source. In these instances, the project is sized to provide the heat energy for the factory and the electricity becomes a useful by-product. The overall efficiency of generating plants in the combined mode is very high, often over 80%. Project sizes are typically in the size range of less than 1MW up to 50MW (electricity) with several examples exceeding 100MW in large factories. The prime mover is now usually a combined cycle gas turbine, although smaller projects may use low speed or medium speed diesels running on heavy fuel oil. A few CHP projects run as auto-generators, that is independent of the grid; others run with a grid connection for modulating the electricity production. Most CHP is operated as cogeneration. Other developments include the use of absorption chillers to provide localised cooling, for air conditioning or industrial processes.

Growth in CHP has been slow since 2000, though it appears to be increasing again. In 2010, “good quality” CHP electrical capacity in the UK was 5,989MW. CHP capacity accounts for just under 7% of total UK electricity production. 77% of CHP projects in 2010 used gas turbines, mostly in combined cycle mode. Demand for process heat currently drives much of the use of CHP; the chemical and oil industry are the predominant users, accounting for two-thirds of CHP capacity in 2010. However, other industries, space heating and use of waste heat are likely to drive much of future CHP growth. 


During the 1990s, several manufacturers developed micro-turbines in response to an increased demand for techniques to reduce the cost of purchasing electricity and to provide increased power quality and security of supply for critical customers. This is more prevalent in the North American market than in Europe, where long distribution lines raise the frequency of power outages. 

A typical microturbine is a scaled down gas turbine, built for ease of maintenance and low running costs. Their fuel is natural gas, although some can use distillate fuel. The compressor and turbine are simplified with a reduced number of bearings. Incoming air is compressed to about 5bar, and exhaust heat is used to heat the incoming air before combustion to increase efficiency. The hot air is mixed with fuel in the combustion chamber and burned, and the hot gas is then expanded through the turbine, driving the alternator. The alternator shares the same shaft as the turbine, rotating at high speed (70,000+rpm) generating high frequency AC (1600Hz). The AC output is rectified to DC and back to AC at 50 or 60Hz in a Power Conversion System (PCS). The PCS allows engine speed to vary with load to optimise part load fuel efficiency and produce a high quality power output.

Microturbines have now been installed for many applications, such as off grid power, emergency back-up, peak shaving and micro CHP. It is important to note that if they are fuelled by natural gas, their use may be subject to a variable gas tariff, which may counter the effects of peak shaving electricity demand.

Stirling Engines

The Stirling engine has the potential for high efficiency electricity generation. There are now some commercial designs suitable for domestic use in the UK starting to appear on the market, nearly 190 years after its invention. Larger devices have been used as power sources on submarines and yachts. 

The engine uses an external heat source (for example natural gas, coal, oil or geothermal) and a heat sink such as water or the atmosphere. A working gas is sealed into the engine and there are no exhausts or emissions. High quality engineering is important, with particular attention paid to the seals and bearings. 

Domestic products combine both a generator and a water heater for domestic hot water and space heating. A typical model will be able to produce from 5-30kW heat and about 1kW electricity. It would have an overall efficiency of about 90%, which compares favourably with the overall efficiencies of both combination domestic gas boilers and use of direct electrical heating for water and space. In addition, it is theoretically possible for it to operate in a grid independent mode, thereby providing some security of supply during power cuts, although as far as is known no commercial offering has this capability engineered in. The product is aimed at the replacement domestic boiler market as well as consumers who wish to reduce their energy bills.

Fuel Cells

Fuel cells generate electricity by direct electrochemical conversion of a fuel by an oxidising agent, offering the potential for high conversion efficiencies and low unwanted emissions. If the fuel is hydrogen or a hydrocarbon, the exhaust products are water or water and carbon dioxide. 

There are various types of fuel cell, and additionally fuel cells can be operated in a number of configurations. For industrial or large scale commercial use, pressurised high temperature fuel cells, combined with a gas turbine and heat recovery for the exhaust gases would offer overall efficiencies in the region of 70-80% or even higher.

High temperature types of fuel cell such as solid oxide (SOFC), molten carbonate (MCFC) offer the best promise for internal fuel reforming, resistance to contaminated fuel and high efficiency through combination with heat recovery. They operate at about 600-900°C. 1MW size installations have been commissioned and are operating.

Mid temperature fuel cells include phosphoric acid types (PAFC) which operate at about 20°C. One manufacturer who produces a 250kW PAFC module has installed several hundred systems worldwide. 

There are several types of low temperature fuel cells. Alkaline fuel cells (AFC) operate at 80°C but require very high purity fuel and oxygen. Solid polymer fuel cells (also known as proton exchange fuel cells (PEM)) also require external fuel reforming and operate at about 80°C but are not as susceptible to poisoning as the AFC. PEM fuel cells are most commonly associated with small scale fuel cell developments, such as for domestic or small scale commercial installations.


There are various types of renewable generation of interest and relevance to distributed generation. Wind and solar (both solar thermal and photovoltaic) are covered by separate briefs. Geothermal is somewhat site specific, although it should be noted that there are some good sites in the UK (e.g. Southampton) where geothermal power is a useful resource.

Most types of renewable generation (with the exception of offshore wind and large scale hydro) are suitable for connection to the distribution networks.


Biomass is an emergent technology incentivised by Renewable Obligation Certificates (ROCs), the Government’s key renewables incentive mechanism, and also by the Renewable Heat Incentive. It is the energy source and its conversion where the technology developments are taking place; the alternator or electrical generation part of a biomass plant is more conventional. Essentially biomass generation is the combustion of vegetable matter to generate electricity. It includes co-firing, where biomass material is mixed with conventional fuels such as coal, as well as boilers etc. designed to cope with a single source of biomass material. The biomass can be specially cultivated for energy production, or it can be sourced from the waste material from other industries. 

Distributed Storage

Pumped hydroelectric energy storage is used for large scale energy storage on power systems. Water is pumped uphill at periods of low demand, and power is generated during periods of high demand or rapid change on the system. Such installations are in the size range 50-2000MW and are considered centralised assets. Alternative technologies can be used at smaller scale. 

Systems have been built and operated using lead acid, nickel cadmium and sodium sulphur batteries. Flywheels and distributed superconducting magnetic energy storage systems (SMES) can also be used. Battery applications are used by utilities in some countries for peak shaving, ramping/modulation, frequency regulation and reserve.

Hybrid systems using batteries, renewable generation and diesels are used in smaller systems, e.g. island systems overseas. Consumers use battery systems for tariff trading, power quality and UPS. Flywheels and SMES tend to be used for regulation, power quality and uninterruptable power supply (UPS) applications. Battery systems of over 20MW have been constructed and operated.

Battery technology is continually improving, although at present it is still prohibitively expensive for many applications. There are several large scale trials occurring in Britain in the expectation that manufacturing costs will fall and such storage could play a significant part in future grid management.