By generating electricity in smaller amounts closer to end-users, we can dramatically increase energy efficiency, reduce carbon pollution, improve grid resiliency, and curtail the need for new transmission investments.

Distributed generation (also called on-site generation or decentralized generation) is a term describing the generation of electricity for use on-site, rather than transmitting energy over the electric grid from a large, centralized facility (such as a coal-fired power plant). As economic development outpaces the expansion of electricity supply in some areas of the country, and with other regions facing constraints on the ability to deliver power where and when it is needed, it is important to encourage local options for electricity transmission.

Most of the power in the United States is currently generated from centralized sources (e.g. coal, natural gas, nuclear, large hydropower), which transmit large amounts of power over long distances. While this approach has benefits, it also has a number of issues. Six percent of generated power in the United States is lost through inefficiencies in the transmission process, mostly due to the long distances the power must travel. Building new transmission lines (or upgrading existing ones) can be expensive and fraught with siting issues and delays. When the grid goes down, millions can be left without power. By deploying smaller power systems near where they are needed, distributed generation avoids most of these issues.

Sources of distributed generation include: on-site renewables, such as wind and solar; waste-to-energy; and combined heat and power (CHP; also known as cogeneration), which involves reclaiming the heat generated by a conventional power plant to heat buildings and/or water.

There are a variety of market and regulatory obstacles that have slowed the expansion of distributed generation in the United States, though these barriers are eroding as more see the value of distributed generation systems and their technology costs come down. The continued growth of distributed generation, supported by policy changes, can allow businesses and communities to address grid vulnerabilities and become more sustainable.

 

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