U.S. Department of Energy - Energy Efficiency and Renewable Energy

Advanced Manufacturing Office – Industrial Distributed Energy


Distributed energy (DE) technologies consist primarily of energy generation and storage systems placed at or near the point of use. DE provides consumers with greater reliability, adequate power quality, and the possibility to participate in competitive electric power markets. DE also has the potential to mitigate congestion in transmission lines, control price fluctuations, strengthen energy security, and provide greater stability to the electricity grid. The use of DE technologies can lead to lower emissions and, particularly in combined heat and power (CHP) applications, to improved efficiency.

Example of a thermally activated energy conversion technology (TAT) -- a type of distributed energy technology.  Distributed energy technologies consist primarily of energy generation and storage systems placed at or near the point of use.  This gas engine-driven heat pump is operating on a rooftop.

Photo of a gas engine heat pump.

DE encompasses a range of technologies including:

DE also involves load reduction and energy management technologies, as well as power electronic interfaces, communications and control devices, multiple system packages, and aggregated blocks of power.

The primary fuel for many distributed generation systems is natural gas, but hydrogen may play an important role in the future. Renewable energy technologies—such as solar electricity, solar buildings, biomass power, and wind turbines—are also popular.

Gas-Fueled Technologies

Since the 1980s, natural gas—which consists mostly of methane—has become increasingly popular for power generation. A combination of new technologies and regulatory changes has been responsible for this shift. Natural gas has several advantages over some renewable energy technologies: the fuel source is continuously available, the up-front cost of generating equipment is typically lower, and the generators themselves are more compact than most renewable power systems. To help ensure continuity of service, local gas companies can store natural gas underground for use during periods of peak demand. Underground storage accounts for about 20% of the natural gas consumed each winter.

Although diesel- and petrol-fueled reciprocating engines are one of the most common DE technologies, especially for standby power applications, they create significant pollution (in terms of both emissions and noise) relative to natural gas- and renewable-fueled technologies, and their use is actively discouraged by many municipal governments. Recently, cleaner gas-fired reciprocating engines have been developed to address these concerns.

Renewable Energy Technologies

Power generation systems using renewable resources—the sun, wind, water, organic matter, and geothermal energy—have some advantages over traditional fossil-fuel-powered generation systems. Most renewable power technologies do not produce greenhouse gases and emit far less pollution than burning oil and coal to generate electricity. With the exception of biomass technologies, the fuel source is free, and indigenous renewable energy sources also represent a secure and stable source of energy for our country.

Renewable energy technologies also have some disadvantages. Solar and wind power are intermittent—they don't produce power if the sun isn't shining or the wind isn't blowing—although this issue can be mitigated through the use of energy storage technologies. The fuel source may be free in most cases, but the generating equipment itself typically has a higher up-front cost than fossil-fuel-powered alternatives. Taken over the lifetime of the generating equipment, however, the cost of electricity produced from renewable sources is, in some cases, approaching the cost of generating power from conventional sources, and each one of them is already economically feasible in certain applications. In distributed applications, "direct use" renewable energy technologies—providing water or space heating, for example—can be used to reduce overall demand for electricity.