Analysis of the environmental benefits of Distributed Generation

The promotion of Distributed Generation (DG) is a direct consequence of an international drive for sustainable development and advances in technology. At present, the development of environmentally friendly (renewable energy sources) and high efficiency power generation (combined heat and power) has attracted significant attention all over the world. However, traditional supervision and management systems in the power industry prevent a full understanding of the benefits of DG, especially those impacting on the environment, by the policy maker and policy executor. This has therefore, hindered the realisation of the full environmental benefits of DG. In this paper, some indices are introduced to quantitatively analyse the value of the environmental benefits of DG in China. In addition, a new mathematical model for calculating the true generation cost of DG was established based on the environmental benefits indices. In this model, a penalty mechanism was introduced for the pollutant emissions of power generation and the environmental value of pollutant emissions was also considered. Simulation results show that the indices and the new model can correctly reflect the environmental benefits and their application should accelerate the development of DG in China.