Recently, efforts have been made to scale down some types of Combined Heat and Power (CHP) plant technology, such as fuel cells, gas turbines, Stirling engines or organic Rankine cycles, in order to adapt them for residential applications. The driving force for this is the high overall thermal efficiency and the low associated GHG emissions. Beside this, distributed power generation is expected to alleviate partially the issue related to the general rise in electricity demand. However, as micro-CHP have only modest electrical conversion efficiencies, the effective exploitation of the thermal output is critical to realising high levels of energy efficiency and the associated environmental benefits. The heat-to-power ratio of currently available micro-CHP units (in the best case approx. 2 to 1) compares poorly with the heat-to-power ratio of high-performance buildings (on average 1 to 1 according to recent construction practice). The present paper considers the building and the heating, ventilating, and air-conditioning (HVAC) system (including the micro-CHP) and the resident's heat and power patterns as a whole, taking into account their inherent interactions. First, it describes new simulation tools which were developed to balance the production and the consumption of both heat and electricity in terms of both energy and costs. Computations based on Solid Oxide Fuel Cells (SOFC) and Stirling engines are discussed. Second, these technologies are compared in terms of primary energy consumption and costs to competing technologies such as condensing gas boilers. Third, the role of the appropriate level of thermal insulation for the building as a compromise between building heat losses and overall primary energy efficiency, including electricity supply, is discussed.