Distributed generation (DG) is the use of small-scale power generation technologies located close to the load being served. It allows industries to produce their own electricity with a gas driven cogeneration facility within their premises.

Traditionally, electricity is generated in large power stations to achieve economies of scale. These power stations are commonly located where the source of energy is easily obtainable.

In most instances, the ideal location for thermal and hydro power plants is not particularly ideal for potential customers. For example, the distance between a power plant and townships or industrial areas, where the need for power is critical for everyday requirements, usually necessitates the construction of long and costly transmission lines.

The construction of transmission networks and power plants incurs additional expenditure. In addition to being inefficient, lengthy transmission lines are susceptible to weather related phenomena such as lighting strikes and storms, which can potentially degrade the quality of supply to customers.

Planting up of new plants costs a lot of money but distribution generation was the way forward for it allows industries to produce their own electricity with a gas driven cogeneration facility within their premises.

It is becoming increasingly beneficial to build smaller power plants closer to the areas requiring the most power. This practise enables better control on the cost of generation while reducing the cost of supply and provides a highly reliable power supply as compared to obtaining it directly from conventional utility service providers.