Micro-CHP or micro combined heat and power is a technology which generates heat and electricity simultaneously, from the same energy source, in individual homes or buildings. The main output of a micro-CHP system is heat, with some electricity generation, at a typical ratio of about 6:1 for domestic appliances.
Combined heat and power (CHP) is a highly efficient process that captures and utilises the heat that is a by-product of the electricity generation process. CHP makes use of the heat which would otherwise be wasted when generating electrical or mechanical power. This allows heat requirements to be met that would otherwise require additional fuel to be burnt. By generating heat and power simultaneously, CHP can reduce carbon emissions by up to 30% compared to the separate means of conventional generation via a boiler and power station.

A typical system generates up to 2.0kW of electricity, once warmed up, and the total amount of electrical energy generated in a year depends on how long the system is able to run. Electricity generated but not used on the premises can take advantage of the Feed-in Tariffs and be sold back to the grid in the same way as for solar PV systems.
There are three viable micro-CHP technologies. The difference is the way in which they use fuel to generate electricity.
Natural gas is consumed either in an engine or in a fuel cell to generate electricity and release heat. In the system as a whole, around 70–80% of the energy value of the gas is converted into heat, principally in the form of hot water which is used for space heating and domestic hot water as in a normal central heating system.
Between 10–25% is converted into electricity, and the remainder (5–15%) is lost in the flue gases. For fuel cell based systems, the electrical efficiency tends to be significantly higher, in some cases more than 40%, but the overall efficiency is roughly the same. This can be compared with a conventional gas central heating boiler where around 90–95% of the energy in the gas is converted into heat and the remaining 5–10% is lost in the flue gases.
Although the overall efficiency of a micro CHP system is similar to a boiler system, the electricity produced has a much higher value than heat. Importantly, it is the value of this electricity which covers the investment cost of the micro CHP unit and delivers a net saving. The only system currently available with Microgeneration Certification Scheme (MCS) accreditation is a Stirling engine unit, and these are now being installed in homes in the UK