Some distributed generation technologies, like photovoltaics and fuel cells, can generate electrici
ty with no, or at least fewer, emissions than central station fossil fired power plants. Additional emissions
can also be avoided using fuel cells, microturbines and reciprocating engines, if the waste heat generated
is usefully employed on site to improve overall system efficiency. Based on the remaining technical poten
tial for cogeneration in the industrial sector alone, it is estimated that nearly 1 quad of primary energy
could be saved in the year 2025.
Packaged cogeneration units that include cooling capabilities (and are
therefore more attractive to commercial building operators) are projected to save 0.3 quads in 2025.
Today's distributed generation market in the United States is largely limited to backup genera
tion. Customers include hospitals, industrial plants, Internet server hubs, and other businesses that have
high costs associated with power outages. Markets are likely to grow as wealth increases and more
consumers are willing to pay to avoid the inconvenience of blackouts. Smaller niche markets are growing
where distributed energy resources are used as a stand alone power source for remote sites, as a cost
reducer associated with on peak electricity charges and price spikes, and as a way to take advantage of
cogeneration efficiencies (see Box 3). Distributed generation could be particularly advantageous in newly
settled areas by requiring less infrastructure investment, by reducing transmission line requirements, and
by being more responsive to rapidly growing demand for power. Increased demand will likely continue and
possibly accelerate well into the future as small scale modular units improve in performance; as decreases
in cost, interconnection, and other barriers are tackled; as the demand for electricity continues to grow;
and as the worldwide digital economy expands. Over the next half century, it is possible that the demand
for ultra reliable power service will increase far more rapidly than the demand for electricity itself. This
demand could be met by distributed energy resources.
For distributed generation to enhance system level efficiency, improvements would be needed in
the performance of power producing equipment. A next generation of power electronics, energy storage,
and heat exchangers would be needed to improve waste heat recovery and cycle efficiencies, and
advanced sensors and controls would also be required. With successful RD&D, the United States (and
much of the rest of the world) could realize a paradigm shift to ultra high efficiency, ultra low emission,
fuel flexible, and cost competitive distributed generation technologies. These technologies would be
interconnected with the nation's energy infrastructure and operated in an optimized manner to maximize
value to users and energy suppliers, while protecting the environment.
Towards a Climate Friendly