Distributed electricity generation

By generating and using electricity locally, we can reduce transmission costs and increase the proportion of renewable energy we use with less impact on the environment.

What is distributed generation?

Most of New Zealand's electricity is generated in large, centralised power stations which can be a long way from where the electricity is used. The electricity is transported around the country through transmission lines, and then carried through local distribution networks to where it is needed.

Distributed generation is different - electricity is generated from small-scale systems and is used on-site or nearby. It can be used to generate electricity for homes, farms, businesses and industries.

Distributed generation projects are hooked up to the local distribution network. These local networks are connected to the national grid. This means that when there is not enough electricity being generated by the local project, users can still get electricity from the network. It also means if excess electricity is being generated, the excess can be exported into the network.

Electricity from distributed generation projects can be generated using different systems such as:

In some cases, ‘cogeneration' heat is produced as well as electricity.

Off-grid generation is also known as stand-alone power systems. They are similar to distributed generation systems but are not connected to the electricity network.

Distributed generation in New Zealand

At least 5% of New Zealand's electricity comes from distributed generation.

Distributed generation can contribute to an efficient and renewable electricity future for New Zealand by potentially:

  • Increasing the use of renewable sources of energy
  • Improving the efficiency of our electricity system by reducing transmission and distribution losses
  • Improving the security of our electricity supply
  • Deferring the need for lines upgrades where it is more cost effective to invest in localised energy generation projects.

EECA is supporting the growth of distributed generation by:

  • Raising awareness of benefits and costs 
  • Supporting the industry to improve quality 
  • Helping to reduce compliance barriers 
  • Providing financial assistance to overcome barriers.

You can find information here about:

More information

Reports relating to distributed generation

This document provides guidance to both home and business owners who are interested in generating their own electricity, but need more information before going ahead. It is directed at the layperson who already has some basic knowledge of micro-generation.  It covers micro and mini-scale wind, solar PV and hydro, as well as batteries and other associated components.

This report reviews the installation of small-scale renewable electricity generation systems on five islands around New Zealand, on Department of Conservation bases. The report reviews the economics and performance of the systems, the potential benefits that accrue from switching from diesel-fuelled generation to systems incorporating photovoltaic modules and micro hydro units, and sensitivity analysis to test the economics under a number of scenarios. Reducing diesel consumption and switching to renewable generation plant is shown to be cost effective in a wide range of situations and circumstances

This report by LECG provides a wide ranging and comprehensive analysis of barriers to the greater uptake of DG in the New Zealand. The study covers the full gambit of DG technologies and potential DG owners or developers.  The author, Toby Stevenson, gave a presentation on his report, in September 2010.  View the presentation Barriers to greater development of DG in New Zealand.

This report provides information to assist local government with the approval processes for small-scale distributed generation. 

You can read a summary of the report or the full report.

This report provides indicative unit costs for a range of small scale electricity generation technologies up to 15 MW in capacity. 

This report investigates how small-scale electricity generation (from 7 to 400 kW) and energy management can provide an alternative to traditional electricity lines supply in remote locations in New Zealand.  

This report, prepared by the Parliamentary Commissioner for the Environment, assesses micro-generation in New Zealand

This report looks at a ‘Business-as-usual' case for the take-up rates of domestic and small-scale distributed generation in New Zealand to the year 2030. 

This report provides high level guidance to independent renewable energy project developers who wish to investigate and progress distributed generation projects. The report focuses on geothermal, hydro and wind projects in the range of 10 kW to 20 MW.

The Electricity Engineers' Association has produced a guide to assist distribution network engineers connect distributed generation.