Author: Rob van Gerwen, KEMA Consulting 
Distributed Generation (DG) and Renewable Energy Sources (RES) are important in increasing the security of energy supplies by decreasing the dependency on imported fossil fuels and in reducing the emissions of greenhouse gases. RES include the sun, wind, hydro and wave & tidal energy as well as sustainable fuels such as biomass. DG refers to the local generation of electricity (and the cogeneration of heat) often, but not essentially from RES. |
The economics of DG and RES depend on many factors such as the state of development of the required processes, the investment cost and the predicted financial return from the sale of energy produced. The main investment costs include the initial investments, fuel prices and the cost of connecting to the grid. Biomass generally gives the lowest cost electricity of all RES-based options followed by on-shore wind and hydro. The most expensive option is solar photovoltaic generation. However, many countries have stimulation measures for renewable systems, including solar cells, which have a significant effect on the viability of DG and RES projects. Regulation and stimulation measures are matters of EU and national politics and it is important that a stable approach is adopted if serious private investment in additional DG and RES capacity is to be encouraged.
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