Calculations to evaluate the economic benefit of introducing fuel cell systems for residential use were conducted based on domestic energy demand. The energy demand, i.e., demand for electricity, city gas and hot-water, was measured in houses in Kiryu, Gunma. Energy cost reduction was obtained as a function of the power generation capacity of the fuel cells and the unit costs of electricity and city gas. In most houses, the optimum generating capacity of fuel cells was in the range between 0.5 kW and 1.0 kW. The effect of the parameters on cost reduction and the optimum power generating capacity was quantitatively demonstrated.