It heats. It powers. Is it the future of home energy?

Down in Bernard Malin's basement is a softly thrumming metal box that turns natural gas into hot water and generates $600 to $800 worth of electricity a year – a bonus byproduct of heating his home.

"It's like printing money," says Mr. Malin, the first person in Massachusetts – perhaps in the nation – to own a residential "micro combined-heat-and-power" system, also known as micro-CHP.

But he's not likely to be the last.

Since Malin changed his home heating system to micro-CHP in February, 18 other families in the Boston area also have adopted the technology, which squeezes about 90 percent of the useful energy from the fuel. That's triple the efficiency of power delivered over the grid.

Factories and other industrial facilities have used large CHP systems for years. But until the US debut of micro-systems in greater Boston, the units had not been small enough, cheap enough, and quiet enough for American homes. Add to that the public's rising concern about electric-power reliability – seen in a sales boom of backup generators in the past couple of years – and some experts see in micro-CHP a power-to-the-people energy revolution.

"Right now these residential micro-CHP systems are just a blip," says Nicholas Lenssen of Energy Insights, a technology advisory firm in Framingham, Mass. "But it's a ... technology that ... could have a big impact as it's adopted more widely over the next five to 10 years."

Home heating systems that produce a kilowatt of electricity – like Malin's – and bigger units that pump out about 4 kilowatts are already available in Europe and Japan. They'll make their commercial US debut in New England in January.

Of course, other home-based power-supply options – solar panels and wind generators – have preceded micro-CHP, with varying degrees of acceptance. Both can be costly and hard to site. Fuel cells are another much-anticipated option, but remain too costly for commercialization. Micro-CHP, by contrast, is an advanced hybrid of existing technologies: an internal-combustion engine generator married to a high-efficiency home furnace.

In Japan, more than 30,000 homeowners have installed micro-CHP systems driven by quiet, efficient internal-combustion engines, each housed in a sleek metal box made by Honda. Japan is ahead because gas utilities have been subsidizing and promoting the systems. In Britain, where the systems look like dishwashers and sit under kitchen counters, 80,000 systems made by a New Zealand company are on order.

At least five companies are building micro-CHP systems worldwide. Two are trying to enter the US market: Marathon Engine Systems of East Troy, Wis., plans to bring a 4-kilowatt hot-water system it sells in Europe to the US early in 2007. Climate Energy of Medfield, Mass., has developed a forced-hot-air system that marries a high-efficiency furnace to a superquiet Honda generator. That system has been deployed as a pilot to several US homes, including Malin's.

Such systems help people like Lynn Denoy insulate themselves from high electricity prices because they draw power from the commercial grid much less often in winter.

"I feel good about money we're saving – and the environment – because we're using less gas [than the old furnace] and creating our own heat and electricity," says the speech therapist from Braintree, Mass. Ms. Denoy's family will buy some power this winter – and all spring and summer when the furnace system is not running.

Still, micro-CHP makes some utilities nervous, experts say. "In North America I don't see utilities embracing it. I think they'll see it as more of a threat initially," says Jon Slowe, a director at Delta Energy & Environment, an energy consulting company in Glasgow, Scotland.

At the municipal utility in Braintree, Mass., where Malin and Denoy live, officials say micro-CHP could bolster the grid in their area with extra power, if the idea catches on. "If 1,000 homeowners bought these in Braintree, that would be great – about 10 percent of our residential load," says William Bottiggi, director of the Braintree Electric Light Department, which partnered with the American Public Power Association to subsidize some local installations.

But William Steeley of Distributed Energy Resources at the Electric Power Research Institute, whose members include investor-owned utilities, says the jury's out. "We are very intrigued by micro-CHP and its potential," he says. "It is competing against well-established technologies. So we'll have to see."

Wind-powered turbines in back yards, solar panels on rooftops, and micro-CHP are part of a gradual shift by homeowners from central power plants and toward self-generated power.

Slowly gaining ground, the trend is "not at all pie in the sky," says Cheryl Harrington of the Regulatory Assistance Project, a nonprofit that helps states and nations develop energy policy. "The question is how to get electric utilities to actively support this kind of generation when it is on the customer's side of the meter."

Micro-CHP doesn't come cheap – just with a long-term discount. Basic systems cost from $13,000 to $20,000, installed. Even at the lower range, that's at least $6,000 more than a new high-efficiency hot-air furnace, even after a gas company rebate. Result: The payback period on the initial investment is three to seven years, depending on the cost of electricity, say officials at Climate Energy. The company expects to install about 200 systems next year, mostly in New England.

Given consumers' interest in having a backup power generator on site, micro-CHP systems that provide that, as well as cut electric bills, may hold the most promise, say analysts.

Climate Energy won't have a model with backup capability until 2008, but is poised to sell its "Freewatt" system that chops electric bills by about 50 percent. Marathon, which makes larger home systems, will offer backup capability when its systems roll out early next year.

While all CHP systems use fossil fuel, some states and environmental groups have endorsed them as a step in the right direction. Through efficiency gains, a Climate Energy system cuts carbon-dioxide emissions for electricity used in the home by 40 percent, company officials say.

If micro-CHP can capture even 1 percent of the 3 million home furnaces sold each year, that would be enough to make it more broadly affordable, says Eric Guyer, CEO of Climate Energy. "I think there will be a mind shift over time."

For Richard Hillel of Belmont, Mass., that shift is here. "When you can have something producing heat and electricity, too, it's great," he says. "We should be doing anything we can to save energy."