The growing worldwide demand for less polluting shapes of energy have led to a renewed interest in the use of Micro Combined Heat and Power (Micro CHP) technologies in the residential sector. Micro CHP have been introduced around Iran recently, and expected to diffuse more and more. In this paper, technical and economic studies for the use of Micro CHP in the different climate zones of Iran are executed. These zones are categorized in to five: Tehran, Rasht, Bandar Abbas. Ardebil and Yazd, based on weather conditions. Later on using an economic model, both annual energy savings and percentage of system profitability in each zone are calculated as well as reduction in annual emissions. It should be mentioned that, for economic calculations, gas and electricity price are determined using a sensitivity analysis. This analysis indicated that profitability of Micro CHP systems are sensitive to energy prices, as well as hours needed for heating room in each climate zones. The analysis results show that Ardebil with 38 million RLS (with electricity buyback) annual energy saving is recognized as the best option for installing Micro CHP. On the other hand, Bandar Abbas with 2.5 million RLS annual energy saving is not suitable. (C) 2011 Elsevier Ltd. All rights reserved.