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Combined Heat and Power Systems for Residential Use

An appliance which makes home-spun electricity and heat

Drawing shows the warm air furnace and the micro-CHP unit of a warm air micro-CHP system.

Once available only to large commercial buildings, Combined Heat and Power generation (CHP) systems are now being produced on a scale that is safe, practical, and affordable to homeowners. CHP technologies, sometimes referred to as cogeneration, have provided heat and electrical energy efficiently at commercial and industrial sites for many years. However, after hundreds of successful residential installations in Japan and Europe, several manufacturers are now offering models in the U.S.

A CHP system uses fuel such as natural gas to produce heat and electricity simultaneously. The electricity can be used for any household device such as lights and appliances. Simultaneously, the heat produced can be used for water heating and/or space heating. About 10% of the fuel used is lost as exhaust, much like a high efficiency furnace.

The engines used in the CHP units for producing electricity can be internal combustion or Stirling (also called external combustion) engines. Other types of generation technologies, such as fuel cells, have not reached the commercialization stage. Micro-CHP, as residential-sized CHP systems are usually called, run on propane, natural gas, or even (in the case of Stirling engines) concentrated solar energy or biomass. The byproduct of electricity generation is waste heat—and plenty of it. One 6-kW unit provides 10 gpm of hot water at 140 to 150°F. This waste heat can be used to heat an entire home, water for domestic use, for swimming pools and spas, or even as an energy source for heat-driven (absorption) cooling systems.

CHP systems are extremely efficient, offering combined heat and power generating efficiency of about 90%, compared to about 30 to 40% for electricity from a central power station.

Micro-CHP units range in capacity from about 1 kW to 6 kW and are about the size of a major appliance. Installation may be performed initially by specialists and, after the technology matures, by an experienced plumber, electrician, or HVAC technician. Units come as grid-tied systems which connect to utility power as backup or as stand-alone systems for remote residences.

One unit with a new, small capacity engine simultaneously produces 1.2 kilowatts of electric power and 11,000 Btus of heat in the form of hot water. The system is combined with a high efficiency, natural gas-fueled warm air furnace or boiler for supplemental space heating.

The small engines tend to burn very cleanly - exceeding all emissions requirements for CO2 and NOx. One unit claims to produce less CO and nitrous oxides than a single burner on a kitchen gas range.

The primary challenge for getting the highest efficiency and best economic return on CHP is to fully utilize all of the thermal energy produced when generating electricity. As the technology develops, various operating regimes will be tested to optimize the energy available based on variables such as the loads in the home, the climate and the season.


Energy Efficiency

Combined heat power systems are offer generating efficiency of about 90%, compared to about 30 to 40% for electricity from a central power station.

Environmental Performance

Systems are expected to reduce CO2 emissions, when compared to conventional heating and electrical generation, by 30%.

Safety and Disaster Mitigation

CHP units could provide electric energy in a wide-spread power outage.


Kind of difficult

The type of CHP system, and its level of interactivity with the electric utility grid will dictate the complexity of the installation. For CHP systems that are designed to feedback electricity to the utility and obtain credit at the same rate for which the electricity is purchased (a net-metering arrangement), the installation will be the most straightforward. If the utility does not accept power fed back to their grid or if it is not credited at the retail rate, the sizing and application of the system will be extremely important. Interconnection with the utility grid means that the CHP unit will need to satisfy utility requirements for power quality and utility protection. In addition, connection to the utility will require special agreements with the utility to allow credit for any power fed back to the utility system. Sizing of the CHP system is important to maximize the benefits of the CHP system to provide both electricity and thermal energy – loads that are often not coincident in homes. CHP systems can be designed to satisfy a thermal load, with electricity as a by-product, or they can be designed to produce electricity with the thermal production as a by-product.

Since residential CHP units are very uncommon, the approval process will need to be evaluated on an individual basis and comply with local building codes. Once the CHP systems gain momentum with practical field experience, and obtain the necessary listings and certifications, the installation of CHP units should occur much like that of other energy producing systems such as PV or wind systems.

Since the CHP systems on the market today utilize piston engines to drive the electrical generator, annual to bi-annual servicing may be necessary but also should be straightforward for anyone familiar with engine maintenance.

High initial cost, combined with historical low electricity rates throughout much of the country, will likely be the biggest impediment to adoption of the technology. Changing electricity and natural gas rates can change the economics of CHP systems in a short period of time.


Cost for a system having 1.2 kW of electrical generating capacity and 11,000 Btuh heating capacity is anticipated to be twice the cost of conventional heating equipment. Unit cost for 2 to 6 kW systems is on the order of $10,000 to $20,000. The cost for installation should be moderately more than a conventional heating system for the additional natural gas line and the additional venting and electrical requirements. One manufacturer estimates installation cost for a system that modulates between 2 and 4.7 kW to be about $4,000 for new homes.


Operating cost and energy savings will vary by type and cost of fuel, efficiency of the system, amount of electricity produced, and whether net metering is available at the site. For the average homeowner in the Northeast, a 1.2 kW system will provide approximately half of the annual household electricity needs. The cost of operating the CHP unit to its full capacity (fully using the thermal output of the CHP) will be less than buying an equivalent amount of fuel gas and electricity as long as electricity costs remain above 8.5 cents per kWh, which is the case in most of the country. Annual maintenance costs are on the order of a few hundred dollars.

In areas with net metering (where power sent into the utility grid is credited at the retail rate), electric costs will be cut by about half.


Systems will need to meet all the relevant IEEE standards and UL requirements referenced in the International Residential Code parts 6, 7, and 8 (Fuel Gas, Plumbing, and Electrical).

The manufacturers will play an important role in securing acceptance by the local building departments.


Hundreds of micro CHP systems have been operating in Japan and Europe for years. Several manufacturers and organizations are conducting ongoing field trials in the United States.


Installation uses the same methods as standard heating equipment. An additional natural gas connection and a vent pipe to the engine generator are required. Systems are appropriate for new and existing homes. In an existing home, the existing furnace or boiler would be replaced but existing ducts or heating pipes would remain unchanged. An indirect water heater provides hot water for domestic use.


Warranties are expected to be similar to conventional heating and power generating equipment.


Payback on investment varies with fuel cost, electricity cost, the availability of net metering (where the utility credits the customer for excess electricity placed onto the utility grid at the retail rate), and the need for the waste heat (e.g., a system heating a pool will provide useful heat and electricity in the summer and winter). Some units operate only when there is a need for heat and are therefore more cost-effective in cold climates. The best economics will be found in cold climates having high electric rates and low natural gas rates.

Combined heat and power systems produce electricity at a very high efficiency when there is a demand for heating. If net metering is available (where the utility credits the customer full retail rate for electricity sent into the grid), the systems can reduce annual energy costs, however, with current technologies and utility rates the payback period can be long. When there is no heating demand, no electrical generation ensues. Payback time decreases as electric rates and heating demand increase.

The extent of maintenance depends on the type of engine and the type of fuel. For a natural gas internal combustion engine, routine maintenance is required every 4,000 to 10,000 hours (about 1 to 3 years). At this interval, an oil and filter change, spark plug replacement, and minor adjustments are necessary. The servicing takes about one hour and costs about $200. It is imperative that internal combustion CHP systems have routine scheduled maintenance. Therefore, most manufacturers are offering systems through authorized installers who will also offer service contracts.

One manufacturer of a Stirling free-piston engine, expected on the market in 2008, touts its product as zero-maintenance because there is no contact between moving parts in the engine.

Another manufacturer will distribute, install, and service through authorized and certified contractors, only. While this will help ensure quality installations, it may be difficult to find qualified contractors in the early stages of the products' development except in specific markets.

Disclaimer: The information on the system, product or material presented herein is provided for informational purposes only. The technical descriptions, details, requirements, and limitations expressed do not constitute an endorsement, approval, or acceptance of the subject matter by the NAHB Research Center. There are no warranties, either expressed or implied, regarding the accuracy or completeness of this information. Full reproduction, without modification, is permissible.