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

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."

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