With distributed generation we mean generation from small relative efficient energy generation units that are located close to the end-user. The main categories are: small scale co-generation, small scale gas fired generation and renewable power generation (including waste power)

After serious power blackouts in 2008 caused by blizzards in South China the Chinese government and the grid company realized that distributed generation is an important way to improve power distribution reliability.

In the “new energy industry develop plan” of the State Council, distributed generation is a key direction of development.

On April 2010, the Energy Bureau of the NDRC released an instruction for development of distributed generation. The instruction indicates thousand distributed power generation plants will be built in China by 2011, and distributed generation capacity in China will increase to 50 GW by 2020

The National government has indicated they will subsidize distributed generation, and they are developing relevant regulation. Any distributed generation technology that complies with the power Grid Companies technical specifications may enter the China market

It is expected that distributed generation will first emerge in high energy consumption area and areas where companies need high power reliability such as Beijing, Shanghai, Zhejiang, Jiangsu and Guangdong. The estimated investment in distributed generation equipment is estimated at around 20 billion Euro in the next 10 years.