Embedded generation

Written and checked by the Energy Merchants desk · Reviewed 3 October 2026

Embedded generation is electricity generation connected within the distribution network, the local poles and wires, instead of directly to the high-voltage transmission grid. Think of the network as a tree: transmission is the trunk and distribution is the branches. A generator on a branch is embedded.

Rooftop solar is the best-known example, but the category also includes batteries that export, small wind, biogas plants and cogeneration at a hospital or factory. Large power stations are generally connected at transmission level.

Why the term matters

Generation inside the distribution network changes how it is run. Distribution networks were designed for one-way flows, from substation to customer. Embedded generation sends power back the other way, which can raise local voltage and complicate protection. That is why networks set connection conditions and why inverters must meet AS/NZS 4777.2.

In practice

An installer deals with embedded generation as a connection process. Before a system can be switched on, the network service provider needs to approve the connection. Applications are covered in grid connection application, and the network is the DNSP. Conditions can include export limits, specific inverter settings and, for larger systems, studies of the local network.

For certificates, the type of generator decides the scheme. A rooftop system up to 100 kW is a small generation unit and creates STCs. From 1 October 2026, mid-scale solar up to 1 MW can also create STCs. See mid-scale solar STCs.

Common confusion

Embedded generation is not the same as an embedded network. The first is about where a generator connects. The second is about how electricity is on-sold within a private site. A building can have both.

It also does not mean the generation is small. A multi-megawatt solar farm on a distribution feeder is embedded as well.

See STC trading, how it works and the glossary.