Microgeneration (or microgenerated energy) is the local production of energy on a very small scale, for individual buildings or communities. Microgeneration technologies offer environmental benefits in terms of low, or in some cases, zero carbon dioxide (CO2) emissions and, as such can contribute significantly to the fight against climate change.

The market for microgeneration continued to develop in 2007, with growth driven by Government policy in this area. The Low Carbon Building Programme (LCBP) and the emergence of new policy around Zero Carbon Homes (ZCH) highlight two key features of the current policy terrain. Throughout 2007, we've been actively engaged in the formulation of codes and labels that certify quality for microgeneration products and services through accreditation schemes. We believe this is key in building up consumer confidence.

Building on our engagement with relevant policy areas, we initiated a project to establish the key issues that we needed to understand to develop strategies in the field of microgeneration. This project was primarily focused on investigating each microgeneration technology, how close it was to being commercially marketed, the amount of CO2 emission that could be saved and how long the customer's payback period would be. The key lesson from this work was that there is no ‘silver bullet’ technology, meaning that no one technology can be 'everything for everyone'. However, what has become clear is that there are a number of microgeneration technologies that can be applied in specific situations with positive carbon saving results.

In addition to this, our market trials of early micro combined heat and power (mCHP) improved our understanding of both market and operational technology challenges. We've therefore established alliances with a number of mCHP technology developers. Together, we will assess products suitable for a range of market sectors and customers.

We've continued to develop relationships with heat pump suppliers, building on our experience with Calorex ground source heat pumps (GSHPs). We have focused our attention on installing ground source heat pumps in social housing which has no gas supply to deliver affordable warmth to low income customers and we're now one of the largest providers of domestic heat pumps in this market. We have assessed a selection of ground source heat pump models (GSHPs), and are trialling a number of air source heat pumps (ASHPs) that we hope will match the requirements of a wide range of applications.

It's clear that microgeneration is a growing area and is likely to increase in importance in the short-term and remain a key element of a decentralised energy economy in the long term. Our work in this arena in 2007 has ensured that we're in a strong position to lead the way in microgeneration, which will in turn support our Changing Energy strategy