The author finds that the efficiency benefits associated with CHP use and the avoidance of transmission costs are not sufficient to compensate for higher investment costs of the DG applications. However, the author notes that the methodologies used to evaluate the external costs are imperfect, and also that technological developments in the efficiency of dispersed energy systems (with specific reference to the development of fuel cells) could increase DG performance. Additionally, in this paper the author attaches a higher environmental impact coefficient to emissions that occur in urban areas than to emissions that occur in non-urban areas. The DG systems are located in urban areas, necessarily close to demand, and therefore, in relative terms, the CHP systems are associated with higher emission costs. The appropriateness of such an assumption should perhaps be considered, and sensitivity analysis around this assumption would be informative