The penetration of distributed generation (DG) at medium and low voltages (MV and LV), both in utility networks and downstream of the meter, is increasing in developed countries worldwide. One key economic potential of DG application at customer premises lies in the opportunity to locally utilize the waste heat from conversion of primary fuel to electricity by reciprocating engine generators (gensets), gas turbines, microturbines (MTs), or fuel cells (FCs) using small-scale combined heat and power (CHP) equipment. Consequently, there has been significant progress toward developing small (kW-scale) CHP applications. These systems, together with solar photovoltaic (PV) modules, small wind turbines (WTs), other small renewables (such as biogas digestors), heat and electricity storage, and controllable loads are expected to play a significant role in future electricity supply. These technologies are herein collectively called distributed energy resources (DERs). They can substantially reduce carbon emissions, thereby contributing to the commitments of most developed countries (or in some cases regional governments, such as California) to meet their greenhouse gas emissions reduction targets (typically based on the Kyoto Protocol), or otherwise substantially reduce their carbon footprints. Also, the presence of generation close to demand can increase the power quality and reliability (PQR) of electricity delivered to sensitive enduses. Indeed, DERs can be used to actively enhance PQR. In general, these three perceived benefits, increased energy efficiency through CHP, reduced carbon emissions, and improved PQR, are the key drivers for DER deployment, although many other benefits, such as reduced line losses and grid expansion deferral, are also often discussed.