Stationary energy, predominately electricity and thermal energy production, is one of the
largest sectors of primary energy consumption in industrialised countries. Electrification has
delivered economic growth and improved standards of living while thermal energy provides
comfort and sustains industrial growth. However, a range of economic, market, technological
and environmental issues exist. In Australia, these include declining energy productivity and
increasing energy prices, changing demand and usage patterns, accommodating emerging
forms of electricity production and contribution to long-term climate change.
Solutions to these issues include adoption of a mix of technical, regulatory and investmentrelated
initiatives. In particular, the adoption of decentralised energy technologies, principally
gas-fired cogeneration (also known as Combined Heat and Power or CHP) and solar
photovoltaic (PV) appear to offer substantial technological and economic benefits over
incumbent centralised technologies (especially, coal-fired generation). The adoption ofthese
technologies may be enhanced by improved government incentives and regulatory reforms
and a better appreciation of factors that influence the availability of investment capital.
This study aims to identify the potential rate and extent of adoption of distributed generation
in general and CHP in particular, by comparison with theoretical diffusion rates of other energy
technologies. It seeks to expose and explore other factors which impact adoption, including
supporting government policy and the need for demonstration to overcome technical risk.
Finally, it examines the potential economic and environmental benefits associated with the
large scale adoption of distributed energy technology.
Through a mixture of literature review, analysis of a range of technical feasibility studies and a
detailed case study, the extent to which distributed technologies may be adopted, and their
financial, efficiency and environmental benefits are assessed.
The analysis suggests that cogeneration is technically and economically feasible and is
therefore a critical transition technology for the Australian stationary energy sector while
distributed generation technologies in general, which are relatively mature and low risk, have
the potential to substantially reduce emissions while also reducing costs and network and
centralised generation investments