we are also likely to be concerned with the sectoral composition of any changes in economic activity because we know that energy demands (and the emissions intensity of output) vary significantly across sectors. To assess the system-wide environmental impacts of significant DG penetration we have to understand its effect on sectoral and aggregate economic activity. In addition, such changes invariably have uneven impacts across household groups, and if we wish to track effects on fuel poverty, for example, we again need to adopt a system-wide perspective. We consider the system-wide economic, environmental and social impacts of significant DG penetration in turn.