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The economics of distributed energy generation: A literature review

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  • Allan, Grant
  • Eromenko, Igor
  • Gilmartin, Michelle
  • Kockar, Ivana
  • McGregor, Peter

Abstract

The UK electricity system is likely to face dramatic technical and institutional changes in the near future. Current UK energy policy focuses on the need for a clean, affordable and secure energy supply. Decentralisation of the electricity system is recognised as one means of achieving efficient and renewable energy provision, as well as addressing concerns over ageing electricity infrastructure and capacity constraints. In this paper we provide a critical literature review of the economics of increased penetration of distributed energy generation. We find that there exists a large volume of research considering the financial viability of individual distributed generation technologies (and we are necessarily selective in our review of these studies, given the wide variety of technologies that the definition of distributed generation encompasses). However, there are few studies that focus on the pure economics of individual or groups of distributed energy generators, and even fewer still based on the economy-wide aspects of distributed generation. In view of this gap in the literature, we provide suggestions for future research which are likely to be necessary in order adequately to inform public policy on distributed generation and its role in the future of UK energy supply.

Suggested Citation

  • Allan, Grant & Eromenko, Igor & Gilmartin, Michelle & Kockar, Ivana & McGregor, Peter, 2015. "The economics of distributed energy generation: A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 543-556.
  • Handle: RePEc:eee:rensus:v:42:y:2015:i:c:p:543-556
    DOI: 10.1016/j.rser.2014.07.064
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    13. Xiaohua Song & Yun Long & Zhongfu Tan & Xubei Zhang & Leming Li, 2016. "The Optimization of Distributed Photovoltaic Comprehensive Efficiency Based on the Construction of Regional Integrated Energy Management System in China," Sustainability, MDPI, Open Access Journal, vol. 8(11), pages 1-19, November.
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    15. Anaya, Karim L. & Pollitt, Michael G., 2017. "Going smarter in the connection of distributed generation," Energy Policy, Elsevier, vol. 105(C), pages 608-617.
    16. Zubo, Rana.H.A. & Mokryani, Geev & Rajamani, Haile-Selassie & Aghaei, Jamshid & Niknam, Taher & Pillai, Prashant, 2017. "Operation and planning of distribution networks with integration of renewable distributed generators considering uncertainties: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 1177-1198.
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    20. Cao, Yijia & Wang, Xifan & Li, Yong & Tan, Yi & Xing, Jianbo & Fan, Ruixiang, 2016. "A comprehensive study on low-carbon impact of distributed generations on regional power grids: A case of Jiangxi provincial power grid in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 766-778.
    21. Maria Teresa Costa-Campi & Daniel Daví-Arderius & Elisa Trujillo-Baute, 2016. "The economic impact of electricity losses," Working Papers 2016/4, Institut d'Economia de Barcelona (IEB).

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