Microgeneration: Power to the people?


This article is part of our special report Wind Energy.

Households and neighbourhoods feeding small-scale electricity and heat into a decentralised European energy grid: this is the vision developed by proponents of microgeneration. Yet at present, the EU's energy system remains centralised and dominated by large power plants. 

The term 'microgeneration' refers to an array of small and medium-sized generators of electricity, including solar, wind, hydro, biomass and waste. Also included in the scope of microgeneration are combined heat and power (CHP) or cogeneration facilities, which feed the heat produced during electricity generation either directly into homes or into a local district heat and power network.     

Proponents of microgeneration (also known as distributed or decentralised generation) argue that a decentralised energy market is a prerequisite for achieving the EU's renewable energy and energy efficiency goals. But they lament that significant obstacles block their ability to compete with larger power producers (EURACTIV 03/07/07). 

In addition, EU member states have different rules in place governing grid access for smaller producers, which the microgeneration industry says acts as a barrier to the development of an EU-wide market for small-scale power generation. At the moment, the EU's microgeneration market remains rather small.

There is no European strategy for microgeneration as such, nor are there specific Commission proposals on the issue. 

Rather, microgeneration is bundled together with a number of measures related to the creation of a European energy policy, including a directive on cogeneration and recent proposals on renewable energies and energy market liberalisation.

Combined, these proposals are designed to make the EU's energy system more flexible, meaning better able to integrate power inputs both from large facilities and small producers like households, while making the energy market more competitive and fair. 

The Commission's proposals on renewable energies particularly seek to facilitate grid access for small power generators. Welcomed by the renewable energy industry, these provisions could be reinforced by Luxembourg's Green MEP Claude Turmes, Parliament's rapporteur on the renewables dossier, who is introducing amendments to strengthen grid access even further (see EURACTIV's interview with the MEP).

Buildings as power plants

Turmes considers buildings to be "the infrastructure for all the decentralised renewables," whereby technologies like solar panels can be mounted on buildings to produce electricity not only for the building itself but also as input for local power grids. 

This vision has been enthusiastically endorsed by Jeremy Rifkin, an American green economy guru and lecturer at the Wharton Business School, whose ideas on a future 'third industrial revolution' characterised by low carbon technologies are influential in EU circles. 

Rifkin has gone so far as to call for an 'energy internet', whereby 'home-made' power can be traded between individuals rather than purchased from a limited pool of large providers.


Realising Rifkin's vision would represent a paradigm shift in the way electricity and heat are produced and consumed. This in turn would require significant changes to existing energy infrastructures and most notably electricity grids, which were primarily designed to accomodate large power plants and distribute power over considerable distances, rather than accomodate input from a wide variety of small power producers. 

There are concerns that a shift towards more microgeneration could negatively impact on power quality and network stability, and that upgrading exisiting networks to accomodate small producers will be too costly and cumbersome. These concerns are outlined in a 2006 briefing paper produced by Leonardo Energy, an initiative by the European Copper Insitute (ECI).

Getting an idea of precisely how much small-scale energy input the EU's existing grids can handle "depends on who you talk to," says Simon Menitt from the consultancy Delta Energy & Environment.

The cogeneration and microgeneration industries put the figure at more than 50% of the EU's current energy supply. The EU's more traditional, large-scale electricity producers scale that figure down to 10%, says Menitt, who believes many EU countries "can get more than halfway" with microgeneration without too many costly or risky changes to the grids. 

Smart grids on horizon?

While the costs and complications of a shift in the EU's grid structure may be subject to debate and interpretation, few experts would refute that ageing power grids in many member states are in need of repair, upgrades or even replacement.  

The problem is particularly acute for those member states that choose to construct many new large-scale power plants, which, whether powered by nuclear, renewable or fossil fuel technologies, add considerable electricity loads to existing grids. 

The Commission argues that further liberalising the EU's energy market will help to solve these issues by creating the necessary market incentives to upgrade energy infrastructures for both small and large-scale energy inputs. In 2004, Brussels also mobilised some of its research and development resources in support of an EU 'SmartGrids' technology platform, charged with developing a vision for the EU's future energy grids for 2020 and beyond.

But the SmartGrids project was only mandated to produce a research roadmap, and the EU has yet to commit any major funds towards a massive upgrade or transformation of the bloc's energy infrastructure. In addition, the EU is struggling to secure funding for a range of 'low carbon' technologies (EURACTIV 27/02/08). 

The climate imperative

Despite these and other challenges, there are signs of a growing consensus that a shift towards decentralised power production not only makes sense but is necessary if the EU is to become more energy efficient and less dependent on foreign energy suppliers.

The exisiting energy system has been repeatedly criticised for being inefficient and polluting, since significant power losses are incurred when electricity is transported over long distances. Critics also focus on the fact that most large power plants do not sell the heat that is produced during electricity generation to nearby consumers. Environmental groups say this constitutes a tremendous waste, considering growing concern over the CO2 emissions incurred during energy production and the resulting impact on climate change. 

"Local generation reduces energy transmission losses, helps to avoid congested areas in the existing transmission grids and enables the use of by-product heat, thus improving overall system efficiencies. Power quality and reliability can also be enhanced," says Leonardo Energy.

Proponents of decentralised generation argue that the EU's grids can handle significant inputs from smaller generators without requiring too many major upgrade investments.

Cogen Europe, which represents the EU's cogeneration industry in Brussels, argues that Europe should not build more traditional grid infrastructures in order to meet the challenges of rising energy demand. "Instead Europe could and should increasingly decentralise electricity production through cogeneration and local renewable energy. This would reduce the strain on our grid infrastructure, reduce CO2 emissions and cut energy consumption. It would also save Europe billions of euros."

In contrast, Eurelectric, which represents the EU's electricity industry in Brussels, warns that "a large-scale increase in small, dispersed generating units will have a significant impact on the distribution networks in both technical and economic terms".

In its opinion on the Commission's 2006 energy efficiency action plan, the European Economic and Social Committee (EESC) argued that "microgeneration units should be encouraged: they should be included in programmes providing incentives for saving energy and reducing impact on the environment, and integrated more easily into national grids as part of distributed generation development. However, support should be provided for businesses to cover the additional costs of changing current transmission grids entailed by the system". 

Greenpeace is clearly in favour of decentralisation: "What is essential now is that there is enough joined-up thinking by the various public authorities to make decentralised energy production grow swiftly enough so that our 2020 climate and other targets are met on time." The NGO also believes that "moves away from inefficient centralised power generation, where most actual energy is thrown away, will in future become the norm. It's a process being driven already by fuel scarcity, by upward prices and by other environmental constraints such as emission caps".

  • Oct. 2008: Parliament plenary and possible adoption of renewables proposals by agreement at first reading.

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