Cost and performance data for distributed energy resources: Literature review, harmonization, and synthesis

The modern electric grid is no longer just a one-way street where power flows from a massive central plant to a neighborhood. Increasingly, it is a two-way network where electricity can be generated right where it is needed, in backyards, factories, and office buildings. These local sources, known as distributed energy resources, include familiar technologies like solar panels and battery storage, but they also rely on older, workhorse machines: generators that burn diesel or natural gas, small turbines, and fuel cells. These machines are vital for keeping the lights on when the main grid fails or when clean energy sources like wind and sun are not available. To plan for a reliable and affordable energy future, engineers and policymakers need to know exactly how much these machines cost to build and how efficiently they run. However, for decades, the data describing these costs has been scattered and inconsistent, making it difficult to compare one machine to another or to trust the numbers used in national energy plans.

A new study by Ryan Hanna at the University of California, San Diego, sets out to clear up this confusion by gathering and standardizing the cost data for these distributed generators. The research focuses on four specific types of technology: diesel generators, natural gas generators, gas microturbines, and fuel cells. These machines come in a wide range of sizes, from small units of 25 kilowatts that might power a single home, up to massive 10,000-kilowatt systems capable of running a large industrial facility. The central problem the author addresses is that different groups reporting on these costs have used different methods to calculate the final price tag. Some reports listed only the price of the engine itself, while others included the cost of the labor to install it, the engineering fees, or the expenses for permits and insurance. Because these definitions of "total cost" varied so wildly, the numbers were often impossible to compare directly, leading to a patchwork of data that looked more like a collection of different languages than a single, coherent picture.

To solve this, the researcher collected 33 different data sets published between 2001 and 2026 from a mix of technology manufacturers, consulting firms, and government laboratories. In total, this effort gathered information on 191 unique energy systems. The core of the work involved a process called harmonization, where every single data point was translated into a common language. The author converted all costs into 2025 U.S. dollars to account for inflation and then forced every study to report costs using the same comprehensive model. This model, known as the total overnight cost, breaks down the price of a system into four distinct parts: the cost of the main equipment, the cost of installing it and the labor required, the cost of engineering and construction management, and the cost of the owner's expenses, such as land preparation and insurance. By filling in the missing pieces for studies that had only reported partial data, the researcher created a complete and consistent set of numbers for every system in the collection.

Once the data was standardized, the study revealed clear patterns in how costs change as the size of the generator changes. For diesel and natural gas generators, the cost per unit of power is significantly higher for smaller machines. For instance, a 50-kilowatt diesel generator costs roughly 2,666 dollars per kilowatt of capacity, whereas a 500-kilowatt unit costs about 1,590 dollars per kilowatt. This means that as the machine gets bigger, it becomes cheaper to build for each unit of power it produces, a phenomenon known as an economy of scale. The study found that this trend holds true for natural gas generators as well, though the difference is slightly less dramatic. The data also showed that for very small systems, the costs for installation, engineering, and other soft expenses can actually exceed the cost of the machine itself, a detail that is often missed when looking only at the price of the equipment.

The research also looked at how these machines perform over time. The study reports new harmonized heat rates (thermal efficiency) and operating costs for diesel generators, gas generators, microturbines, and fuel cells. While the analysis covers both systems that generate only electricity and those that capture waste heat to provide hot water or steam, known as combined heat and power systems, the data on variable operating costs was too sparse to draw definitive conclusions about how they scale with size. Similarly, while heat rate data is provided for all system sizes, the study does not confirm a specific trend that smaller systems have lower efficiency compared to larger ones; rather, it provides the underlying data points for these attributes across the full range of capacities. The analysis noted that combined heat and power systems are more complex and expensive to build because they require additional equipment to manage the heat, but they offer higher overall efficiency.

One of the most significant outcomes of this work is the creation of a new set of "representative" systems. Instead of relying on a single, potentially outdated number for a 500-kilowatt generator, the study provides a detailed profile for systems of specific sizes, ranging from 25 to 10,000 kilowatts. These profiles include not just a single cost figure, but a range of likely costs that reflect the natural variation found in the real world. For example, the study provides a best-estimate cost for a 500-kilowatt natural gas generator along with a lower and upper bound that captures the uncertainty in the data. This allows planners to run simulations and economic models with a much clearer understanding of the risks and costs involved. The study also noted that for fuel cells, the data was too sparse to create these detailed profiles, highlighting a gap in the current knowledge that future research will need to fill.

Ultimately, this work does not claim to have discovered a new technology or to have solved the energy crisis. Instead, it provides a reliable foundation of facts that other researchers and policymakers can use. By ensuring that everyone is speaking the same language when discussing the cost of distributed energy, the study helps to remove the guesswork from planning. The findings suggest that while smaller generators are more expensive per unit of power, they remain a critical tool for reliability, and their costs can be predicted with greater accuracy than before. This clarity is essential for deciding where to invest in the future of the electric grid, ensuring that the transition to a more decentralized and resilient energy system is built on solid, comparable data rather than conflicting reports.