Some states have attempted to promote distributed generation through the use of economic incentives. These incentives help to lower the economic threshold for project development. There are numerous amounts of financial incentives for distributed generation projects that utilize "renewable energy". In general this refers to wind, photovoltaic, biomass, hydro, and fuel cells. Unfortunately, states have not been as generous for fossil fuel fired distributed generation.

The Database of State Incentives for Renewable Energy (DSIRE) is a comprehensive source of information on state, local, utility, and selected federal incentives that promote renewable energy. Established in 1995, the Database of State Incentives for Renewable Energy (DSIRE) is an ongoing project of the Interstate Renewable Energy Council (IREC), funded by the U.S. Department of Energy and managed by the North Carolina Solar Center.

The US Environmental Protection Agency maintains a database of funding incentives for combined heat and power (CHP) that can be found on their CHP “Funding Resources” webpage. The website also includes information on state regulations that remove unintended barriers to CHP development.