This action aims to control the energy intensity in buildings and industry by stimulating the market take up of co-generation, tri-generation and polygeneration for individual houses, residential houses, tertiary buildings, and business and industrial parks. Polygeneration systems, appropriately integrated in the end use application, are expected to result in important energy efficiency increase of the overall system and in important reductions in installation/operating/maintenance costs.

Projects shall focus on innovative applications of energy technologies and advanced energy services. Projects should address in particular the situation in countries where the potential for improvement and better utilisation of the existing district heating infrastructure is significant. Projects should have short-term exploitation prospects (before 2010).

The potential for the market penetration of fuel cells into the stationary power, heat and cold production sectors has to be addressed through innovative integration into end use applications where fuel cells are able to deliver an added value for the customers and a reduced risk for the supplier. Renewable energy sources for the necessary hydrogen production can bring an added value for greenhouse gas emission reduction and will improve security of energy supply and the current energy mix.

There is a growing awareness that the ongoing liberalisation of the electricity sector requires a flexible approach to the provision and distribution of electricity. Polygeneration aims at improving the interaction between large and small suppliers of electricity, heat or cold in order to achieve overall improved efficiency and economics without reducing the quality and security of supply. It will lead to a new distribution of the operational risks (blackouts, unstable grids, etc.) between small and large electric utilities and end users.

New technologies, standardisation and new grid management tools should facilitate the access of small self-producers to the grid. Fuel flexibility (including renewables) ensures increased security in the decentralised energy market.