Distributed generation (DG) contributes to a more sustainable electricity supply. Large-scale adoption of DG will bring radical changes to the traditional model of generation and supply as well as to the business model of the power industry. Furthermore, with innovations in information and communication technology (e.g. smart metering), energy and information infrastructures become more and more entwined and smart grids are enabled. Specific potential for applying DG at the domestic level lies in the efficient use of heat and electricity from micro combined heat and power systems (micro-CHP). The main problem with micro-CHP is the high up-front investment costs in comparison with conventional gas-fired boilers. With current investment costs, micro-CHP is economically infeasible. This thesis explores the potential cost savings with intelligent control of micro-CHP. Such control effectively utilizes micro-CHP’s inherent flexibility and can thereby increase the economic feasibility of the technology. Intelligent control schemes are designed and model simulations assess their economic performance. As a first control objective, demand response is looked into, in which retail companies provide real-time electricity tariffs and controllers in households react to those tariffs when dispatching micro-CHP units. In a second case, intelligence is lifted to a higher system level and virtual power plants (VPPs) of micro-CHPs units provide balancing services to wind farm operators. The main conclusion drawn from both cases is that variable cost savings with intelligent control of micro-CHP do not substantially improve the technology’s economic feasibility. When investment costs drop in the future and investments in micro-CHP (operated under standard control) are deemed economically feasible, the additional savings with intelligent control provide an aggregate incentive to initiate VPPs, because the total savings from groups of households are considerable. The value of micro-CHP’s inherent flexibility therefore lies in the clustered, intelligent application of this technology.