Electricity is mainly generated in large power stations (2000 MW and above) and 75% of home heating comes from gas supplied through a nationwide network. While centralized systems deliver economies of scale, safety and reliability, the transfer of

electricity to remote users loses 20.3 Mtoe, which is 8.7% of the total energy gener­ated (Table 1.4). However, new and existing technologies, especially advances in gas turbines, have achieved maximum efficiency in small power plants of up to 10 MW (Poullikkas, 2005). This makes it possible to generate energy close to where it is used, which is known as ‘distributed generation’. Distributed generation has been defined as ‘a small scale power generation technology that provides electric power at a site closer to customers than central station generation and is usually interconnected to the transmission or distribution system’ (Edinger and Kaul, 2000).

Distributed energy includes:

• All plants connected to a distribution network rather than transmission network.

• Small-scale plants that supply electricity to a building, industrial site or community.

• Microgeneration, small installations such as solar panels, wind turbines, biomass burners supplying one building or small community.

• Combined heat and power plants (CHPs), including large, community — or build­ing sized and micro-CHP, replacing domestic boilers in homes.

• Non-gas sources of heat such as biomass, wood, thermal, solar or heat pumps for households and small communities.

These smaller systems can be more flexible and reduce the distribution losses incurred with a centralized system. At present less than 10% of electricity comes from micro­generation and CHP plants but these are increasing. The advantages of the distrib­uted generation include:

• These plants can be more reliable.

• They are flexible in their energy source. These can handle renewable sources of power.

• They avoid transporting fuel long distances.

• Less power is lost in distribution.

• They enable the introduction of alternative power systems which can be intermit­tent such as wind power and photovoltaics.

These distributed systems could fundamentally change the way energy is supplied, and reduce transmission losses and fuel imports.