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Abstract: Nowadays, as set by the EU 20-20-20 targets, the reduction of primary energy use and greenhouse gas emissions in the energy sector can be attained by increasing the use of renewable sources and improving energy efficiency. Many national and international research programs are aiming at developing innovative technologies and new energy management strategies in order to reach the targets set out in the 20-20-20 directive. In this context, a primary role is played by the Distributed Generation (DG), which refers to the electrical and thermal generation located near to the place of use, exploiting available renewable sources. One of the best way to exploit the emerging potential of DG is to take a system approach which views generation and associated loads as a whole concept called “microgrid.” The sources can operate in parallel to the grid or can operate in island, providing utility power station services. Utilization of waste heat from the sources will increase total efficiency, making the polygeneration microgrid more financially attractive and “smart” from the energy consumption standpoint. The “smartness” is also in the management system, where control strategies aiming at the optimization of technical, economical and environmental issues are typically implemented. This paper deals with smart microgrids, addressing basically the following topics: (1) to review methods, models, tools, technologies and research challenges in the specific field; (2) to present the University of Genoa Smart Polygeneration Microgrid (SPM), built with the financial contribution of the Italian Ministry of Education, University and Research at the decentralized Savona Campus facilities. The SPM produces energy at low emissions for the University and operates as a test-bed facility for research, testing and development of smart grid components. [Copyright &y& Elsevier]