There is renewed interest in distributed generation (DG). This paper reviews the different technological options available for DG, their current status and evaluates them based on the cost of generation and future potential in India. The non-renewable options considered are internal combustion engines fuelled by diesel, natural gas and microturbines and fuel cells fired by natural gas. The renewable technologies considered are wind, solar photovoltaic, biomass gasification and bagasse cogeneration. The cost of generation is dependent on the load factor and the discount rate. Gas engines and Bagasse based cogeneration are found to be the most cost effective DG options while wind and biomass gasifier fired engines are viable under certain conditions. PENI Fuel cells and micro turbines based on natural gas need a few demonstrations projects and cost reductions before becoming viable. A strategy involving pilot projects, tracking of costs and dissemination of information is likely to result in DG meeting 10% of India's power needs by 2012. (c) 2004 Elsevier Ltd. All rights reserved.