Thanks for the replies guys and gals. This is just an idea at this point and I may never get to do it. I have the engine, just have to come up with the other "parts" and time. It will be an experiment and to gain experience on CHP.

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85 300D turbo pristine w 157k when purchased 161K now
83 300 D turbo 297K runs great. SOLD!
83 240D 4 spd manual- parted out then junked

Its easily possible to live off the grid, it all depends how efficient you can make your household and what methods you use to power it. A combination of solar/wind/diesel generator + a big bank of batteries would result in a very efficient system. Probably not cheap to implement, but it would work. If a household is really frugal, you could get by with very little power at all. I consider myself pretty frugal, I only average 260 kw/hours a month.....and that is with leaving my computer on most of the time. If I dropped that, I'd save another 40-50kw/hours. Its relatively easy to produce a few hundred kw/hours a month via solar/wind/diesel.

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-diesel is not just a fuel, its a way of life-
'15 GLK250 Bluetec 118k - mine - (OC-123,800)
'17 Metris(VITO!) - 37k - wifes (OC-41k)
'09 Sprinter 3500 Winnebago View - 62k (OC - 67k)
'13 ML350 Bluetec - 95k - dad's (OC-98k)
'01 SL500 - 103k(km) - dad's (OC-110,000km)
'16 E400 4matic Sedan - 148k - Brothers (OC-155k)

An outfit by the name of Marathon used to make, and may still make, a total energy unit powered by a water cooled Briggs & Stratton engine designed to run on natural gas. It generates electricity through an inverter and battery bank, and waste heat is used for domestic heating. This is where the economy comes from- it also heats your house. Life expectancy was 40,000 hours with a once per year service interval.