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The Evolution of Point of Use Generation

The Evolution of Point of Use Generation

Have you ever wondered how electricity reaches our homes? Well, the electrical power system consists of three stages. First, energy is generated in a far-off place at some suitable location.

From there, a network of transmission lines carries it to the distribution substation. Distribution lines then take this power from the distribution substation to the consumer.

But what if we localize energy generation and get rid of this huge infrastructure? And can this really be achieved?

Point of Use Generation (On-site Generation):

The concept of point of use generation or on-site generation is that energy can be generated locally at a small level. The generated energy, instead of being transmitted at long distances, feeds direct power to the end-user.

For example, a shop having a diesel engine generator generates and utilizes energy at the same place i.e. the shop.

Similarly, a school, hospital or building can have their own generating units and the energy is utilized at the point of use i.e. the school, hospital or the building, etc.

With the rapid advancement in technology, energy generation on a smaller scale is now possible at the local level. The renewable sources like solar, wind, etc. have also made on-site energy generation more affordable.

On-site generation provides several advantages like increased grid resiliency, cost savings, no transmission losses, etc. It can even prove to be an alternative to the main grid for small or medium businesses.

Benefits of Point of Use Generation:

(1) Increased Grid Resiliency:

By using on-site generation in conjunction with the main grid, we can have two sources of electricity. These sources can run parallel to each other.

Energy from the main grid can be used when the on-site generation unit is not available e.g. due to maintenance etc.

Similarly, energy from the on-site generating unit can be utilized during main grid failure or a blackout, etc.

This way the smooth flow of electricity is ensured almost all the time. Thus, the overall resiliency of the power system is increased.

Also, any surplus energy from the on-site generating unit can be fed back to the main grid earning the user some rebate or discount.

(2) No Transmission Line Losses:

The typical power system consists of a generating station at some suitable location in a far-off place.

From there, a network of transmission lines carries the power to the distributing substation. From the distributing substation, the distribution lines carry power to the end-user.

This process of flow of electricity from generating station to the distributing substation and then to the end-user involves a lot of line losses and a good amount of electric power is lost.

In point of use generation, electricity is generated and utilized in the same place. Therefore, no network of transmission and distribution lines is required. The result is power generation and utilization with zero or negligible line losses.

(3) Cost Savings:

Cost is a major factor for many while considering a power option. The two options available are; the main grid and the point of use generation.

The main grid consists of a huge generating unit and a huge infrastructure for transmitting power. All these factors count in while calculating the energy cost.

The point of use generation, on the other hand, is free from any infrastructure requirements. Also, the renewable sources are getting cheaper with no to very low operating costs.

Considering these factors, the point of use generation system can provide substantial cost savings for businesses with low to medium energy demand.

Especially in the case of renewables, after an initial investment, the operating costs are almost negligible.

(4) Utilization of Heat Generated from Fossil Fuel Generating Units (Co-generation)

For a relatively larger energy requirement, e.g. a school, building or a hospital, combustion-engine fossil-fuel generating units are used.

Because of the combustion process, these generators also release heat (Co-generation). This released heat is often wasted which otherwise could be utilized for several purposes.

The heat generated during this process can be used in various applications like heating a building or providing hot water etc.

The utilization of generated heat increases the overall cost-effectiveness of the system and may also reduce the need for a separate heating system.

(5) Integrating Renewable Energy Sources:

On-site generation can integrate both fossil fuel generation units and renewable energy sources. However, fossil fuel generators are responsible for much of the carbon emissions.

With the growing emphasis on global warming, the whole world is looking for ways to cut down the number of carbon emissions.

Point of use generation can help to serve the purpose by integrating renewable energy sources into the system.

These sources are free from all sorts of emissions and are, therefore, helpful in the conservation of the environment.


The concept of point of use generation is very vast and has a large number of applications. It offers several advantages in terms of increasing grid resiliency, cost savings, loss-free transmission, and clean energy.

While at the same time, it also gives businesses control over their energy production. This increases the efficiency of the power system as the business can adjust power production according to their requirements.

Point of use generation has great potential to fulfill the energy needs of small and medium businesses and may even offer a viable alternative to the main grid.

Wayne Williams

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