The paper describes the advantages of distributed power and heat supply with the recently available mini-cogeneration units. The deregulation of the energy market and the changes in the delivery and price policies of power and heat has created a new market niche. This approach is applying a great number of small units distributed among small users of combined heat and power. The distributed system is a set of power and heat production units intended only to meet the requirements of a local user. The backup power and heat is delivered either from a parallel local unit or from an outside grid. The advantages are in the field of energy efficiency, lower emissions of pollutants into the atmosphere, lower capital and maintenance costs. For a variety of users (hotels, hospitals, apartment buildings, small industry, agriculture etc.) in the conditions of open power and gas markets, mini-cogeneration systems should be of interest also for energy (electricity and gas) distribution and supply companies as a way to gain new customers or keep previously captive customers. This work presents the recent development in this field in Slovenia, specifically describing the beta - prototype unit installed. Operational experience, dealing with outages, capacity alignment, control of harmonics, maintenance issues, development of back up and transitional problems will be presented. Specific design and economical features, including some technical details of the installation, as well as considerations concerning the particular location, are described in detail.
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