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Version: 2.0
(October 6, 2006)

Distributed Generation

Are you concerned about the cost of your electricity and heating bills? Does the prospect of global warming worry you? Distributed generation (also called "Decentralized Energy" or "Onsite Generation") might be the answer. Distributed Generation is defined by the proximity of the source of electricity generation to the source of its consumption: electricity for household or business use is produced on site or nearby. Distributed generation systems function on low wattage (one to 500 megawatts) which is appropriate to serving smaller groups of consumers (such an energy supply can serve 500 to 25,000 households). In contrast to traditional, larger energy systems, distributed generation permits surplus energy to flow back from the consumer to the power grid, where it can then be stored or sold back to the power company. Such methods cut cost and waste: "Distributed generation systems with Combined Heat and Power (CHP) systems can be very efficient, using up to 90% of the fuel they consume. . . Estimates are that CHP has the potential to reduce the energy usage of the USA by 40%(2)." Distributed generation systems can be based on both nonrenewable sources, like coal or oil, and renewable sources such as solar or wind power and biomass combustion.

The majority of energy production is generated on a larger scale. In 2005, the USA generated 3,970.6 TWh (TerraWatt hours) of energy, while only 162.2 of those TWh were generated through distributed generation. However, more and more businesses and communities are looking to distributed generation as a means to serve their energy needs more cheaply and more reliably. Though the current economic climate carries few incentives for gas and electricity networks to maximize efficiency, there is a growing trend among nations and corporations to diversify energy systems. For more in-depth information about distributed generation, visit the Congressional Budget Office.

1) Wikipedia: Distributed Generation. 14 July, 2006.