Microgeneration is a catch-all term for small generation systems. While there is no generally accepted definition of the term, it is generally understood to mean plants with an output of 50 KW or less though some sources consider anything producing less than 1 MW to be a microgenerator.

This is a rapidly growing energy source: in 2005 the world output of small-scale generators with no or low carbon emissions overtook that of the nuclear industry. This excludes power generated by large hydroelectric schemes.
- Amory Lovins, Rocky Mountain Institute

These systems cover the range from individual domestic installations to community schemes. Their chief characteristics are that they are distributed plant. The energy source is physically close to those using its output, and they are often heterogenous systems. Both these factors make them inherently more energy efficient than traditional power sources.

Traditional electricity grids have around an 8% distribution loss: a PV roof or a rooftop wind turbine avoids this loss by producing electricity at the building which will use it.

Distributed systems can show substantial efficiency gains by producing more than one type of output. A micro-CHP system running on diesel or gas will use its waste heat to provide hot water and room heating while meeting the electricity requirements of the building. Such a system can operate at nearly double the thermal efficiency of a central power generator and that's before allowing for the central generator's grid distribution losses.

Finally, a microgeneration system can benefit from using more than one energy input. Sunny days are often calmer than windy ones, so combining solar collectors and a wind turbine extends the duty cycle of the system. Micro-CHP would also combine well with a wind turbine or solar energy collector because the greatest heating and electricity demands in a house occur after dark: the micro-CHP runs the house at night while wind or solar handle the daytime requirements.