A dynamic simulation of micro combined heat and power (micro-CHP) systems that includes the transient behavior of the system was developed by modeling the generation of electricity and recovery of heat separately. Residential load profiles were calculated based on statistical reports from a Korean government agency, and were used as input data to select the optimum capacities of micro-CHP systems based on the number of apartment units being served, focusing on both economic and energetic criteria. The capacity of internal combustion engine (ICE) based micro-CHP was assumed to be in the range 1-500 kW, and the dependence of the efficiency of the generator unit on the capacity was included. It was found that the configuration (i.e., the capacity and number of generator units) that maximized the annual savings also had favorable energetic performance. Additionally, the statistical mode calculated from the annual electrical load distribution was verified as a suitable indicator when deciding the optimum capacity of a micro-CHP system. (C) 2010 Elsevier Ltd. All rights reserved.