Not all technologies were suitable to all situations, so the government must also make sure that adequate information was available to allow consumers to make informed choices, the House of Commons Trade and Industry Committee said.

"Local energy has the potential to reduce carbon dioxide emissions by displacing the use of fossil fuels, decreasing network losses, and increasing energy awareness amongst users," it said.

"Greater use of local energy could, prospectively, increase the security of the UK's energy supplies by drawing on a more diversified range of fuel sources, many of which are renewable," the report added.

However, it rejected arguments that microgeneration could make the national grid obsolete by replacing all centralised electricity generation facilities.

These, it said would still be needed because local generation would not always provide sufficient power and in any case would take some years to meet its potential.