This article presents the concept and mathematical treatment for a techno-economic modelling framework designed to enable exploration of fuel cell micro combined heat and power (micro-CHP) system design and control The aim is to provide a tool that can help to focus research and development attention on the system characteristics critical for commercial success of these technologies, present cost targets for developers, and to ensure policy makers provide appropriate instruments to support commercialisation The model is distinctive in that it applies mixed integer unit commitment formulation to link design and control decisions for micro-CHP, and explicitly characterises stack degradation in a techno-economic framework. it is structured to provide depiction of the fuel cell stack and balance-of-plant, supplementary thermal-only system (e g tall gas burner), thermal energy storage, and electrical power storage Technically, the fuel cell stack is characterised by steady-state thermal and electrical efficiencies for full and part-load operation, its nameplate capacity, minimum operating set-point, and stack degradation via performance loss rate proportional to power density and thermal cycling rate The dynamics of operation are emulated via ramp limits, minimum up-time and minimum down-time constraints, and start-up and shutdown costs and energy consumptions The primary performance evaluation metric adopted is the maximum additional capital cost a rational investor would pay for the fuel cell micro-CHP system over and above what they would pay for a competing conventional heating system. The companion article (Part 2) applies the developed model to consider the impact of stack degradation on economic and environmental performance. (C) 2009 Professor T Nejat Veziroglu. Published by Elsevier Ltd. All rights reserved