Solid oxide fuel cells (SOFCs) have the potential to efficiently convert chemical energy into electricity and heat and are expected to be implemented in stationary combined heat and power (CHP) systems. This paper presents the heat balance analysis for a 5-kW medium-sized integrated SOFC system and the evaluation of the effect of anode gas recirculation on the system performance. The risk of carbon deposition on an SOFC anode due to anode gas recirculation is also assessed using the C-H-O diagram obtained from thermodynamic equilibrium calculations. These results suggest that a higher recirculation ratio increases net fuel utilization and improves the electrical efficiency of the SOFC system. Furthermore, cost simulation of the SOFC system and comparison with the cost of electricity supply by a power grid indicates that the capital cost is sufficiently low to popularize the SOFC system in terms of the total cost over one decade. (C) 2016 Elsevier B.V. All rights reserved.