Decentralized Energy is not a technology so much as a way of thinking about providing energy- especially electricity. Renewable DE, fossil-fired DE and energy recycling offer many advantages over conventional power generation in terms of environment, economy, efficiency, security and reliability. The benefits are achieved not just because of how DE technologies generate electricity but also because of where they generate electricity. All of the three types of DE work because they share one thing in common: they are means of providing electricity where it is required.

Central Generation versus Decentralized Energy

By far the most common means of generating electricity in most countries around the world is via centralized generation. Whether a central plant is a 1000MW coal plant, a wind farm, a large dam or a nuclear reactor the model is the same. The plant is typically located some distance from where the power is required. Electricity is generated on large scale then transmited at high voltage via transmission towers often great distances. Voltage must then be stepped down to a distribution level, sometimes more than once, and further transmited to end customers. Between 5 and 10% grid losses are common as a result of transmiting power large distances. This means that central generators must generate 5-10% more power than is required. Indeed, an additional 5-10% of generating capacity is required to meet meet demand and this means additional capital funds must be spent that could be avoided if DE was instead employed.

Centralized generation can be renewable or non renewable but, according to the International Energy Agency, about 67% of world electricity generating capacity in 2004 was based on polluting fossil fuel combustion- coal, natural gas and oil. In the case of this central thermal capacity another major problem emerges. Conventional power plants produce only electricity from each unit of fuel they consume. A natural byproduct of burning any fuel to generate electricity is heat. As a result up to 70% of the useful energy in the fuel (depending on the technology being used) is usually exhausted up the smoke stack as waste heat. Because central plants are not located near factories or communities it is not feasible to use the waste heat for things like heating buildings or industrial processes that require high temperatures. It is very inefficient to ship heat over large distances. One practical way of putting more of the energy in the fuel to use is by siting smaller plants close to where heat is required. Power plants sited close to communities could then use their waste heat to heat buildings (as is very common in Scandanavia and elsewhere in Europe). Power plants sited close to or at industrial sites could use their waste heat for a variety of industrial processes required for making anything from paper and food, to chemicals and machines.

In short DE works- offers environmental benefits- by displacing electricity that would otherwise have been generated by large centralized plants and, in the case of thermal-based generation, greatly increasing the efficiency of fuel use.

Different Infrastructure Requirements

Building decentralized energy ensures optimum use of existing energy infrastructure such as gas pipelines and electricity distribution and transmission wires. As more and more DE is built in a region the infrastructure needs are likely to evolve. We may witness a shift may occur from building both fuel pipelines and power wires to more of an emphasis on pipelines and other fuel delivery infrastructure for distributed generators. Pipelines are a much more efficient way of moving energy than high voltage wires and therefore more environmentally friendly. As very small generators become more common we will also see an increase in investment in smart metering and power control devices. High tech computers will be phased in to replace obsolete technologies. Work by WADE suggests that these shifts are likely to displace the need much infrastructure spending and save utilities and governments fortunes.

Because DE generates power where it is needed much less fuel is required to provide the same services. In this figure red represents gas distribution and yellow represents power distribution- the end users at the bottom generate their own power on-site using gas and so much less overall pollution is created.