INTERNATIORAL ENERGY. AGE. NCY COGEN EllROPE ANN . UAL CONFER�NQ:, 2002 system technically feasible. Conclusions Distributed generation is expected to play a greater role in OECD power generation over the next decade. There is a growing interest on the part of power consumers for installing their own generating capacity in order to take advantage of flexible distributed generation technologies to produce power during favourable times enhance power reliability and quality, or supply heating/cooling needs. While much of !his capacity generally contributes little to overall electricity production, it can be expected to become an increasingly important source of peak supply. in !his way, distributed generation is contributing to improving the security of electricity supply. However, the introduction of increased wind and CHP systems could increase needs for primary regulation capability. Retail market liberalisation will play the key role in opening up the economically efficient development of distributed generation. Retail market liberalisation will give consumers access to the distribution system. Structural reform will leave the distributor indifferent rather than in competition with distributed generation. Unbundled pricing will make it possible, at least in principle, for a distributed generator to capture the value it can bring to a distribution system, and to pay the costs that it imposes. Nevertheless, !here remain substantial institutional and regulatory barriers to develop distributed generation markets fully. Partially liberalised markets leave distributed generation competing with the utility through its lack of legal access to the distribution grid. The lack of standards for connection of smaller distributed generation increase transaction costs for distributor and distributed generator. Emissions regulations can be overly demanding for small sources. Reforms to OECD electricity markets therefore need to ensure !hat distributed generators can get access to loca! electricity grids and do not compete with the distribution company for supply. Regulators will play a key role in ensuring that distributors, rather than discriminate against distributed generators, are rewarded when !hey encourage distributed generation that reduced distribution network costs. Standardising interconnection rules would reduce transaction costs. Environmental approvals should be streamlined and recognise the net benefits that distributed generation could offer. Prices that recognise the locational value of distributed generation to support distribution network activities and to relieve network congestion are also needed. Further research and development are needed to improve the competitive position of more advanced distributed generation technologies and increase their penetration into the electricity market. lmprovements in the environmental performance of existing technologies will also be needed to ensure their long-term acceptability. lf distributed generation does take a large share of the generating market, the role of distribution utilities will become vastly more important than currently. There will be a need to reform distribution system design requirements to accommodate '-distributed generation. Further study to identify the technical capabilities, the operating strategies, and the skili requirements of distribution network operators would help prepare electricity � ECOGENERATION WORLO markets for a more decentralised electricity system. References Alderfer et al., 2000. Alderfer, 8., M. Eldridge, and T. 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