Micro-generation is defined as a notion of simultaneous generation of both heat and power in an individual dwelling. It offers an elegant and economically viable way to meet the residential power/thermal loads and Kyoto targets by demonstrating superior environmental performance with high efficiency and low harmful greenhouse gas emissions. However, before introducing micro-generation systems in large quantities a number of issues should be resolved in terms of system integration, interconnect, reliability and safety. Two demonstration houses were built at the Canadian Centre for Housing Technology that have the capability of assessing different energy and building technologies under real-life conditions. A project was initiated involving a consortia of Canadian electric and gas utilities, Canadian Government agencies and Canadian fuel cell manufacturers to modify one of two existing research houses and to integrate a prototype micro-generation unit in it that would provide electricity and heat to the house, and supply surplus electricity back to the grid. The key research objectives were assessment of building integration, micro-generation system design issues and system performance characteristics. A Stirling engine micro-generation unit, fuelled by natural gas, was used for this demonstration. The unit had an electrical output of 736 We and a thermal output of 6.5 kW(th). The Stirling engine was connected in parallel to the grid and the residual heat from the engine was utilized through a specifically designed heat utilization module. The paper discusses the micro-generation system performance in two different setups and scenarios that were tested over the 2003 winter/spring seasons. Data showed that the micro-generation unit was able to satisfy all of the space and water heating loads to the house during the testing period. The unit provided a considerable percentage of the house's electrical requirement, and even exported, in a few instances, some electricity back to the grid. (C) 2004 Elsevier B.V. All rights reserved.