Combined Heat and Power (CHP) has been proven as a mature technology that can benefit both building owners and utility operators. As the economic and environmental benefits of CHP in urban centers gain recognition, regulations and policies have evolved to encourage their deployment. However, the question remains whether these policies are sufficient in helping to achieve the larger sustainability goals, such as the New York City-specific goal of incorporating 800 MW of distributed generation. In this paper, the current regulatory and policy environment for CHP is discussed. Then, an engineering analysis estimating the potential for CHP in NYC at the individual building and microgrid scale, considered a city block, is performed. This analysis indicates that over 800 MW of individual building CHP systems would qualify for the current incentives but many systems would need to undergo more cumbersome air permitting processes reducing the viable capacity to 360 MW. In addition microgrid CHP systems with multiple owners could contribute to meeting the goal even after considering air permits; however, these systems may incorporate many residential customers. The regulatory framework for microgrids with multiple owners and especially residential customers is particularly uncertain therefore additional policies would be needed to facilitate their development. (C) 2013 Elsevier Ltd. All rights reserved.