Sri Lanka has a hydropower dominated power system with approximately two thirds of its generation capacity based on large hydro plants. The remaining one third are based on oil fired thermal generation with varying technologies, such as oil steam, Diesel, gas turbines and combined cycle plants. A significant portion of this capacity is in operation as independent power plants (IPPs). In addition to these, Sri Lanka presently has about 40 MWs of mini-hydro plants, which are distributed in the highlands and their surrounding districts, mainly connected to the primary distribution system. Further, there are a few attempts to build fuel wood fired power plants of small capacities and connect them to the grid in various parts of the country. The study presented in this paper investigates the impact of these new developments in the power sector on the overall emissions and the greenhouse gas (GHG) emissions in particular. It examines the resulting changes to the emissions and costs in the event of developing the proposed coal power plant as an IPP under different investment and operational conditions. The paper also examines the impact on emissions with 80 MWs of distributed power in different capacities of wind, mini-hydro and wood fired power plants. It is concluded that grid connected, distributed power generation (DPG) reduces emissions, with only a marginal increase in overall costs, due to the reduction in transmission and distribution network losses that result from the distributed nature of generation. These reductions can be enhanced by opting for renewable energy based DPGs, as the case presented in the paper, and coupling them with demand side management measures. It is also concluded that there is no impact on overall emissions by the base load IPPs unless they are allowed to change over to different fuel types and technologies. (C) 2004 Elsevier Ltd. All rights reserved.