This paper presents the initial development of a lab scale of Ericsson cycle heat engine for applications as a micro-Combined Heat Power (mCHP) system. The heat engine utilizes unique volumetric rotary compressor/ expanders that do not require valve mechanisms and provide significantly greater heat conduction surface area per unit volume than other systems, allowing the cycle to approach isothermal compression and expansion. The parameters of the rotor geometry are explored to provide insight into optimum rotor geometry for a small (3kWe) mCHP prototype system to demonstrate the advantages of the unique geometry.