Abstract: A fluidized bed combustion system particularly suited for use in a residential or light industrial heating system comprising a fluidized bed combustor housing a combustion chamber wherein fuel is burned to generate hot flue gas, a heat exchanger disposed inside of the combustion chamber, a particulate collector for removing fine particles entrained in the flue gas before the flue gas is vented to the atmosphere, and a fan for supplying air into the combustion chamber. The combustor features an insulated non-adiabatic combustion chamber with a cooling and heat exchange in the combustion zone and in the free-board area above the combustion zone. Electric heating means are disposed within the fluidizing region of the combuston chamber to provide the capability of heating the slumped bed during shut down to maintain bed temperature above the ignition point.