Abstract Distributed generation, defined as generation located at or near the load centers, is being recognized as an environment friendly, reliable,

and secure source of power which not only has minimal negative social impacts but also serves to promote social welfare. This paper aims at bringing out the reason for the current interest in distributed generation, its salient features from an economic and social perspective and the challenges to be faced while increasing its share in the electricity generation mix. The paper to identify the distributed energy resources available and proposes methods to tap them. It also studies the social consequences of wide spread deployment of distributed systems and their accommodation into the new liberalized energy market. But in order to be a credible alternative generation paradigm, distributed generation will have to overcome significant technical, economic, regulatory and environmental hurdles.

Introduction
When Thomas Edison built the Pearl Street Power station to provide the first electric service to customers in New York City he was essentially following a strategy that today would be called distributed generation building power generation within the localized area of use. As the young industry grew, many industrial facilities built their own power plants both to serve their own needs and to sell to customers around them, another example of distributed generation. Rapid technological development led to larger and more efficient generating plants built farther and farther from the end-user. Large regional power transmission networks delivered this power to the local distribution systems and finally to the end-user. The industry was regulated so that these changes could occur efficiently without wasteful duplication of facilities, and the economic role of distributed generation became much more limited.
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Since the 1970s, however, large central nuclear and coalfired power stations have become increasingly expensive and more difficult to site and to build. At the same time, technological development has improved the cost and performance of smaller, modular power generation options from 300 megawatt (MW) gas-fired combined cycle power plants down to individual customer generation of as little as a few kilowatts. The industry is also restructuring to allow customers to competitively select the optimum combination of energy resources to meet their needs. Under the current centralized system, electricity is mainly produced at large generation facilities, shipped through the transmission and distribution grids to the end consumers. However the recent quest for the efficiency and reliability and reduction of green house gas emissions led to explore possibilities to alter the current generation paradigm and increase its overall performance. In this context, one of the best methods to complement or even replace the existing system is distributed generation where the energy is produced next to the point of use. Although they represent a small share of the electricity market they play a key role for applications in which reliability is crucial, as a source of emergency capacity, and as an alternative to expansion of a local network, in developed economies where uninterrupted power supply is essential. In developing countries like India, where the generation is inadequate to meet the demand, reliability and energy security are of lesser importance. Developing country can tap the potential of DG to extend their present generation capacity in an environment friendly and cost friendly manner. DERs mainly constitute non-conventional and renewable energy sources like solar PV, wind turbines, fuel cells, small-scale hydro, tidal and wave generators, micro-turbines etc. These generation technologies are being preferred for their high energy efficiency (micro-turbine or fuel cell based CHP systems), low environmental impact (PV, wind, hydro etc.) and their applicability as uninterruptible power supplies to power quality sensitive loads.

Distributed generation:
Distributed generation is an electric power source connected directly to the distribution network or on the customer site of the meter. It generates electricity from many small energy sources. Most countries generate electricity in large centralized facilities, such as fossil fuel (coal, gas powered), nuclear, large solar power plants or hydropower plants. These plants have excellent economies of scale, but usually transmit electricity long distances and negatively affect the environment. Distributed generation allows collection of energy from many sources and may give lower environmental impacts and improved security of supply. Distributed generation plants are mass-produced, small, and less site-specific. Their development arose out of: concerns over perceived externalized costs of central plant generation, particularly environmental concerns, the increasing age, deterioration, and capacity constraints upon T&D for bulk power, the increasing relative economy of mass production of smaller appliances over heavy manufacturing of larger units and on-site construction, and

Along with higher relative prices for energy, higher overall complexity and total costs for regulatory oversight, tariff administration, and metering and billing. Capital markets have come to realize that right-sized resources, for individual customers, distribution substations, or micro grids, are able to offer important but little-known economic advantages over Central Plants. Smaller units offered greater economies from mass-production than big ones could gain through unit size. These increased values due to improvements in financial risk, engineering flexibility, security, and environmental quality of these resources can often more than offset their apparent cost disadvantages. DG, vis--vis Central Plants, must be justified on a life-cycle basis. Unfortunately, many of the direct, and virtually all of the indirect, benefits of DG are not captured within traditional utility cash-flow accounting. While the levelized generation cost of distributed generation is more expensive than conventional sources on a kWh basis, this does not include a complete accounting for the negative externalities associated with conventional fuels. The additional premium for DG is rapidly declining as demand increases and technology progresses, and sufficient and reliable demand will bring economies of scale, innovation, competition, and more flexible financing, that will make DG clean energy part of a more diversified future. Distributed generation reduces the amount of energy lost in transmitting electricity because the electricity is generated very near where it is used, perhaps even in the same building. This also reduces the size and number of power lines that must be constructed. Typical distributed power sources in a Feed-in Tariff (FIT) scheme have low maintenance, low pollution and high efficiencies. In the past, these traits required dedicated operating engineers and large complex plants to reduce pollution. However, modern embedded systems can provide these traits with automated operation and renewables, such as sunlight, wind and geothermal. This reduces the size of power plant that can show a profit.

Distributed generation technologies:

Commercial energy technologies include: IC engines Gas turbines Micro turbines Energy storage technologies

Renewable energy technologies include: Fuel cells Solar photovoltaic Wind & Wave Energy Hydro electric energy Some of them are discussed below: A. Reciprocating Engines Reciprocating engines are the most common technology used for distributed generation. They are a proven technology with low capital cost, large size range, fast start-up capability, relatively high electric conversion efficiency (up to 43% for large diesel systems) and good operating reliability.
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These characteristics, combined with the engines' ability to start up during a power outage, make them the main choice for emergency or standby power supplies. They are by far the most commonly used power generation equipment under 1 MW. The main drawbacks of reciprocating engines are noise, costly maintenance and high emissions, particularly of nitrogen oxides. These emissions can be reduced, with a loss of efficiency, by changing combustion characteristics. Catalytic converters are a proven emissions-control technology. Larger systems can use selective catalytic reduction (SCR) to reduce emissions. Particulate emission control is usually necessary with diesel engines B. Gas Turbines Small industrial gas turbines of 1- 20 MW are commonly used in CHP (combined heat and power) applications. They are particularly useful when higher temperature, steam is required than can be produced by a reciprocating engine. The maintenance cost is slightly lower than for reciprocating engines, but so is the electrical conversion efficiency. Gas turbines can be noisy. Emissions are somewhat lower than for engines, and cost-effective NOx emissions-control technology is commercially available. C. Micro turbines One of the most striking technical characteristics of micro turbines is their extremely high rotationalspeed. The turbine rotates up to 1, 20,000 rpm and the generator up to 40,000 rpm. Individual units range from 30-200 kW but can be combined readily into systems of multiple units. Low combustion temperatures can assure very low NOx emissions levels. They make much less noise than an engine of comparable size. Natural gas is expected to be the most common fuel, but landfill gas, or biogas can also be used . The main disadvantages of micro turbines at this stage are its short track record and high costs compared with gas engines. D. Fuel Cells Fuel cells are compact, quiet power generators that use hydrogen and oxygen to make electricity. The transportation sector is the major potential market for fuel cells, and car manufacturers are making substantial investments in research and development. Power generation, however, is seen as a market in which fuel cells could be commercialized much more quickly. Fuel cells can convert fuels to electricity at very high efficiencies (35%-60%), compared with conventional technologies. Their efficiency limits the emissions of greenhouse gases. As there is no combustion, other noxious emissions are low.

E. Photovoltaic Systems Unlike the other DG technologies discussed above, photovoltaic systems are a capital-intensive, renewable technology with very low operating costs. They generate no heat and are inherently small-scale. These characteristics suggest that PV systems are best suited to household or small commercial applications, where power prices on the grid are highest. Operating costs are very low, as there are no fuelling costs. PV systems also are widely used in developing countries, serving rural populations that have no other access to basic energy services. PV systems can be used to provide electricity for variety of applications in households, community lighting, small businesses, agriculture, healthcare, and water supply . The other half of existing PV capacity is on-grid, mostly as distributed generation. Most on-grid PV installations to date have enjoyed very large investment subsidies or favorable prices for the electricity they generate . The economic viability of PV systems is much higher when they can displace an extension to a distribution line.
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F. Wind Wind generation is rapidly growing in importance as a share of worldwide electricity supply. About 4.2 GW of capacity was installed during the year 2000.Wind power is sometimes considered to be distributed generation, because the size and location of some wind farms makes it suitable for connection at distribution voltages E. Hydro electric resources Water constantly moves through a vast global cycle, in which it evaporates from oceans, seas and other water reservoirs, forms clouds, precipitates as rain or snow, then flows back to the ocean. The energy of this water cycle, which is driven by the sun, is tapped most efficiently with hydropower. The principal advantages of using hydropower are: Its large renewable domestic resource base, The absence of polluting emissions during operation, Its capability in some cases to respond quickly to utility load demands, and Its very low operating costs. Hydroelectric projects also include beneficial effects such as recreation in reservoirs or in tail water below dams. Disadvantages can include High initial capital cost and Potential site-specific and cumulative environmental impacts.

Social and economic implications:

The social impact of wide deployment of small, mini, micro and pico hydro power generation for DG in India is discussed in detail below:

Consumers will get power at lower tariff as more power becomes available at lower per unit cost. Consumers will be relieved from frequent power cuts and load shedding. Consumers will immensely benefit from better regulation and power quality.

As on-site DG eliminates need for costly high voltage transmission lines transmission and large distribution lines. The problem of land acquisition for their construction and the related woes of people can be done away with DG. The effect of high voltage transmission lines on the health of the people living near it is and the interferences created by them on radio and TV signals are done away with DG. More employment opportunities both at plant management level and in the manufacturing sector for related machinery will improve living standards of the people. Availability of power at low cost will attract more investments, which would be more evenly distributed throughout the country rather than being limited to cities alone. As per capita power consumption increases the living standards of people will improve. Increased use of power will increase the demand for more electrical good and this will lead to a spur in growth in the industrial sector.
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Challenges to be faced:
To sustain the forecast penetration rate, the architecture of the electricity sectors needs to be altered. The current infrastructures were not originally built to accommodate a large proportion of distributed generation. For the moment, only necessary adjustments are undertaken in order to accommodate these new capacities. Over the long run, however, increasing significantly the share of distributed generation will necessarily mean revamping the whole physical and regulatory architecture of the electricity network and more precisely the distribution network.

Technical constraints:
The first difficulties to overcome are related to technical improvements necessary to ensure high system reliability with distributed generation. The following section gives an overview of the technical issues caused by distributed generation. The issues can be classified as follows: Capacity: Adding distributed generators at the distribution level can significantly impact the amount of power to be handled by the equipment (cables, lines, and transformers). In order to avoid overload problems, reinforcement work will have to be undertaken. The critical piece will often be the transformers (converting medium voltage to low voltage or high voltage to medium voltage) if power generated exceeds by far consumption, power will have to flow back from the low voltage network to the medium voltage network or from the medium to the high voltage network and be directed to other consumption areas. The transformer will have to be able to handle this reverse flow i.e. being able to convert it back and have specification to cope with potential oversupply. This is of major issue at peak hours: at that time both continuous and peaking distributed generators will operate to cash in the price premium. Production forecast from peaking distributed generators is key while determining the specifications of the equipment, as capacities will be added when the total power flow is already significant. Voltage: Distributed generators are often connected to low voltage networks. When power is carried over long distance, voltage tends to drop due to resistance in cables. As generators connected to the distribution network tend to increase the network voltage, they may help keep the voltage within the specifications over the distance and have a positive impact on the network.

This positive impact is however strongly dependent on the number of generators connected to the distribution network and their concentration: above a certain threshold, adding another distributed generator might negatively impact the network by increasing voltage above the specifications. Protection: While using distributed generation, additional protection systems are required to avoid internal faults, defective distributed network and islanding . Islanding occurs when part of the network is still operating with the distributed generators delivery electricity to customers while the rest of the network has been disconnected. It can be useful to operate the network in such a way to ensure steady supply of consumers with critical need for electricity or ensure that the majority of the network is still operating while a section is under maintenance. The main issue comes from

undetected islanding as network operators might undertake repair work and thus incurs significant risk for staff members. Voltage and current transients: Short term abnormal voltage or current oscillation may occur as distributed generators are switched on or off. The result of these oscillations can have a destabilizing effect on the network. Transmission and distribution losses: One of the key advantages of distributed generation is that it helps reduce transmission and distribution losses as distributed generators are not connected to the transmission grid and some of them might even choose to operate as captive plant for a client with thus limited use of the distribution grid. Recent research has however shown that above a threshold (at very high penetration rate and with generators concentrated in a specific area and all of them feeding the distribution grid), the size of the transmission and distribution losses goes up again. Ancillary Services: As of today all the ancillary services positively impacting the quality of electricity delivered are provided by centralized generators. For example, centralized generators are requested to keep capacities in excess of peak load to adjust production in case of demand surge, to hold voltage control device. As the share of distributed generation increases, distributed generators will have to provide a larger share of these services. In addition to the technical issues mentioned above, two fields of research will have to be further investigated: active network and virtual power plants and microgrids. Historically, distribution networks have been less sophisticated than transmission network as they were passively distributing energy from the transmission networks to the customers. The coordination between the generators and the adjustments in outputs were done directly at the transmission level. The integration of distributed generation on a large scale will however require the distribution network to be active in the sense that they will have to manage the flow coming from centralized generation through the transmission lines, forecast the levels of output from distributed generators (and especially peak generators), collect information, devise start-up procedures in case of system failures, automation. The aim of such a venture is to build a decentralized control system where the grid management is handled by semi-autonomous entities. These entities will then be able to operate jointly or as island

in case of failure on part of the network thus ensuring a minimum impact on a located system failure. An extension of this idea is the concept of virtual power plant. A virtual power plant is the coordination of several distributed generators in order to act as an integrated plant. The plant is virtual as it is not in one place but made of the aggregation of several units. The operation of such a plant required a strong integration of information, communication and management systems. One way of integrating small scale distributed generators is through a microgrid. As of today, distributed generators are mainly integrated through medium voltage grids. Significant research is however underway to facilitate the integration in low voltage grids with local coordinating functions or microgrids.

Cost competitiveness:
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One key hurdle to overcome in a deregulated power market is the cost competitiveness of distributed generation. This parameter varies, however, a lot from one technology to the other mainly. One of the main reasons for such a difference is the age of the technology and its current state of development. For example reciprocating engines have been used for decades and are a mature technology while fuel cells are still subject to significant research and development in order to become a credible source of generation. According to scientists, more than 5 years of research and development will be needed for it to become a mature technology to be adopted on a large scale. Table below gives an indication of the capital costs, operating and maintenance costs and fuel cost of the different technologies

Cost competitiveness of distributed generation today is thus heavily impacted by the capacity of the regulation to price its impact on the electricity network and on its ability to provide specific services to the end consumer such as heat generation or ancillary services. The diffusion rate of distributed generation will thus be driven by the ability of the regulator to lift the regulatory barriers. This issue will be of major importance as it will strike the balance between a market driven diffusion model whereby the distributed generators will be able to increase their return on investment through prices (incorporating factors such as avoidance of use of the grid, investment deferral, emission abatements etc) and a subsidized model with the state or electricity regulator imposing higher tariffs for distributed generators when the price signal fails.

Environmental impact As previously mentioned, distributed generation does not necessarily mean clean generation. The performance with respect to emissions of distributed generation operating either for the sole production of electricity or as cogeneration units. Renewable energies were left off the sample as for those technologies the main concern is less emissions than cost per kWh. Table below gives the emissions comparison between gas and diesel reciprocating engines, microturbines, fuel cells, combined cycle gas turbines and coal steam turbines. The emissions produced by a boiler have been added to make it possible to compare the emission of centralized generation with an extra boiler used on site for heat and distributed cogeneration

As already mentioned above distributed generators are not best in class when it comes to emissions. Diesel reciprocating engines are the worst emitters in terms of nitrogen oxides (NOx). Combined cycle gas turbines tend to be the best performers in terms of carbon dioxide (CO2), sulphur dioxide (SO2) while fuel cells are the lowest emitters when it comes to NOx, CO, particulate matters (PM10) and hydrocarbons (HC). The optimal technology to be used here is thus a function of costs, emissions and heat to power ratio. Distribute generation is not always the best performer in terms emissions. Though some technologies such as fuel cells seems promising for future application, the absence of implementation background and the costs of this technology are still hindering its diffusion on a large scale. To be used in the cleanest way possible, distributed generation will thus have to use the less emitting technologies and favour cogeneration.

DG in Indian context :
The main distribution technologies that suits the energy demands of developing countries like India areas follows: A. Diesel CHP in India In India, where the power system is heavily reliant on coal, much of it of low quality, and transmission and distribution losses are very high, averaging 22% including "non technical" losses (technical losses alone have been estimated at 13%), compared with an OECD (organization for economic cooperation and development ) average of 6.8%. Power reliability problems make distributed power an attractive option for some Indian industries. Industrial power-generating capacity amounts to 15 GW, of which 6 GW is by diesel generation.

B. Small, Mini And Micro Hydel Power India's hydroelectric potential has been assessed at 84044 MW at 60% load factor Of which only 13391.10MW is being utilized (60% l.f). The estimated utilizable surface water resource is 690 cubic km providing a rich source of hydroelectric development. There are 12 major river basins draining the country all of which when taken together amount to about 25,28,084 sq km of catchment area. Most of these river basin have been exploited for their hydro-electric potential to such an extent that any further efforts may lead to drastic environmental degradation and alter the flow pattern and disturb the delicate network of flora and fauna depending on them (north eastern region of the country is an exception).
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Moreover certain other large scale projects which were proposed were turned down either because they were located in areas prone to earthquakes or demanded evacuation of large number of people or would cause huge areas of forest areas to be submerged. But besides these large river basins there are a number of small and medium river basins comprising west flowing rivers covering the states of Gujarat, maharashtra, karnataka& kerala and east flowing rivers covering orissa, Andhra pradesh, Tamil Nadu, Karnataka and Bihar. Not only are the rivers suited for small hydro power plants but the innumerable small stream which feed these rivers are very much suited for mini and micro hydel power project. As these mini and micro project don't require creation of huge reservoirs they can be set up easily within a short period of time and have a short gestation period. Hence these small, mini, and micro power plants are best suited for distributed generation in India C. Pico-hydro projects PICO HYDRO projects are hydroelectric projects with a power generation capacity of up to 10 KW which convert energy in water flowing down a gradient into electrical energy. It comprises of tapping water from a natural stream flowing down from a gradient at higher elevation, passing through a water conducting system and letting into a turbine which drives an electrical generator to produce electricity. These projects are particularly suited for small scale industries located in rural areas and also for community electrification of remote villages. Pico hydro systems require only small water flows and therefore there are many sites at which they can be used. They are onsite DG units and are not designed to supply surplus power to the grid. Even in countries with extensive grid electrification, small communities are often not connected because of the high costs of step-down transformers and low revenues. Locally manufactured systems can be produced which have much lower long term costs per kilowatt than solar, wind and diesel systems. The market for pico hydro in India is largely unexploited due to a number of inhibiting factors:Pico hydro technology is not available in many countries. Where pico hydro equipment is available it is generally too expensive or of dubious reliability Potential customers lack information on how to generate income from pico hydropower.

Merits of Small, Mini, Micro and Pico - HP over Large Scale Hydel Power Plants
The biggest advantage of SHP (small hydro power) is that it is the only 'clean' and renewable source of energy available round the clock. It is free from many issues and controversies that continue to 'hound' large hydro projects, like the submergence of forests, siltation of reservoirs, rehabilitation and relocation, and seismological threats.

Other benefits of small hydro are: user-friendliness, low cost, and short gestation period. Most of the DG technologies used in developed countries have little relevance in the Indian context. The cost per unit kWh is high for IC engines and gas turbines.
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Sites suitable for wind, tidal and wave energy power generation are few in number. The photovoltaic technology, till date, is extremely costly because of huge capital required Moreover growing concern about the environment and stringent emission norms make generation of power from fossil fuel DC technology economically unviable. Taking the above mentioned facts, the huge hydroelectric potential of India, and the controversies surrounding large hydel projects into account, it can be seen that small, mini, micro and pico hydel generation is best suited for India.

Conclusion:
Thus we have seen that though distributed generation has a number of advantages over conventional central power generation, and is most suitable for tapping small power resources scattered over a large area, yet it still can't replace the grid. Grid based central power system is still preferred for most of the cases except in situations when the cost of installation of transmission system is too high. Thus an ideal power system, which has the benefits of DG as well as grid, can be formulated by accommodating these DGs into the grid along with central power units so that surplus power generated at DGs can be easily sent to regions, which have a deficit. In the Indian context, distributed generation through small , mini ,micro and pico hydel projects do hold the solution to power crsis . Moreover distributed genration also aids in promoting economic development and social welfare . moreover community distribution projects by ensuring greater participation of people helps to create a civic conscience in the society.

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