The objective of SmartCHP is the realization of a cost-effective and flexible energy system by using a liquid bio-energy carrier to fuel an efficient diesel-engine based CHP. It will develop a smart and flexible, small-scale CHP unit (100-1,000 kWe) fueled with fast pyrolysis bio-oil originating from different types of biomasses and/or residues. Fast pyrolysis converts biomass into a uniform liquid intermediate called FPBO, and the process is characterized by a high feedstock flexibility. Nowadays, FPBO is produced on commercial scale in Europe. For small scale biomass CHP systems a standardized fuel, enabling optimization of the conversion units and thus creating a cost competitive value chain, is highly preferred. Moreover, to achieve high resource efficiencies at all times a highly flexible ratio between heat and power generation is desired. A smart, demand driven unit should be capable of dealing with the fluctuating energy demand and/or varying availability of wind/solar power. The SmartCHP system combines a FPBO fueled engine and flue gas boiler to produce electricity and heat at a high efficiency over the whole load range. A dedicated flue gas treatment guarantees low emissions. Moreover, a wide, adjustable heat-to-power ratio is covered which enables to respond directly to actual energy demands. The final result of SmartCHP is an integrated system consisting of an engine, boiler and flue gas treatment system adapted and optimized to run on FPBO (TRL 5). A real-time, predictive, dynamic model will be developed to find the optimal operation point at all energy demands. Techno-economic, socio-economic and environmental assessments will be performed to identify real market opportunities. The SmartCHP unit will be based on standard diesel engines, and specific investment costs are expected to be around 1,200 Eur/kWe; an electricity price below 0.10 Eur/kWh is realistic. Several case studies will be presented to illustrate the opportunities throughout Europe.