In this article, a comparison of the thermodynamic and economic effectiveness of two heating systems dedicated to residential applications is presented: a natural gas-fueled micro-cogeneration unit based on a free-piston Stirling engine that generates additional electric energy, and a heat pump system. The measurements of the heat pump system as well as those of the energy (electricity and heat) demand profiles in the analyzed heating season were conducted in a single-family house. The measurements of the mu CHP unit were made using a laboratory stand prepared for simulating a variable heat demand. The efficiency of electric energy generation in the mu CHP unit was in the range of 7.2%-12.7%, and the overall efficiency was in the range of 88.6%-92.4%. The economic evaluation of the mu CHP unit revealed a slight loss compared to the operation of the heat pump throughout the heating season. Sensitivity analysis of the unit price of natural gas and electric energy was performed, and revealed that a reduction in the gas price or an increase in the purchase price of electricity at 2% would have a beneficial financial effect when operating a mu CHP system as compared to a heat pump. (C) 2018 Elsevier Ltd. All rights reserved.