The purpose of this study is to construct the heat recovery generation system for co-generation in commercial and residential buildings. As a power recovery device, the authors focused on the scroll expander because of the potential for high-efficiency, and developed a new scroll steam expander. In this study, the authors applied the leakage prevention mechanisms to the expander for reduction of internal leakage in the very small clearance between the expansion chambers. The authors conducted the performance test by using steam as the working fluid, and explored future challenges to improve the expander performance. The result shows that it is important to reduce the leak loss and heat loss to achieve the better performance of the scroll steam expander. The further examination is required in the future whether seal characteristics and lubrication action of flocculated water has influence on expander performance.