Micro combined heat and power or microCHP is an extension of the now well-established idea of cogeneration to the single/multi family home or small office building.

microCHP systems' chief difference from their larger-scale kin is in the operating parameter-driven operation. In many cases industrial CHP systems primarily generate electricity and heat is a useful by-product. Contrarily, microCHP systems, which operate in homes or small commercial buildings, are driven by heat-demand, delivering electricity as the byproduct. Because of this operating model and because of the fluctuating electrical demand of the structures they would tend to operate-in, homes and small commercial buildings, microCHP systems will often generate more electricity than is instantly being demanded.

To date, microCHP systems achieve much of their savings, and thus attractiveness to consumers, through a "generate-and-resell" or net metering model wherein home-generated power exceeding the instantaneous in-home needs is sold back to the electrical utility. This system is efficient because the energy used is distributed and used instantaneously over the electrical grid. The main losses are in the transmission from the source to the consumer, which will typically be less than losses incurred by storing energy locally or generating power at less than the peak efficiency of the microCHP system. So, from a purely technical standpoint net metering is very efficient.

Another positive to net metering is the fact that it is fairly easy to configure. The user's electrical meter is simply able to record electrical power exiting as well as entering the home or business. As such, it records the net amount of power entering the home. For a grid with relatively few microCHP users, no design changes to the electrical grid need be made. Additionally, in the United States, federal and now many state regulations require utility operators to compensate anyone adding power to the grid.