The world of energy has lately experienced a revolution, and new rules are being defined. The climate change produced by the greenhouse gases, the inefficiency of the energy system or the lack of power supply infrastructure in most of the poor countries, the liberalization of the energy market and the development of new technologies in the field of distributed generation (DG) are the key factors of this revolution. It seems clear that the solution at the moment is the DG. The advantage of DG is the energy generation close to the demand point. It means that DG can lower costs, reduce emissions, or expand the energy options of the consumers. DG may add redundancy that increases grid security even while powering emergency lighting or other critical systems and reduces power losses in the electricity distribution. After the development of the different DG and high efficiency technologies, such as co-generation and tri-generation, the next step in the DG world is the interconnection of different small distributed generation facilities which act together in a DG network as a large power plant controlled by a centralized energy management system (EMS). The main aim of the EMS is to reach the targets of low emissions and high efficiency. The EMS gives priority to renewable energy sources instead of the use of fossil fuels. This new concept of energy infrastructure is referred to as virtual utility (VU). The VU can be defined as a new model of energy infrastructure which consists of integrating different kind of distributed generation utilities in an energy (electricity and heat) generation network controlled by a central energy management system (EMS). The electricity production in the network is subordinated to the heat necessity of every user. The thermal energy is consumed on site; the electricity is generated and distributed in the entire network. The network is composed of one centralized control with the EMS and different clusters of distributed generation utilities and heat storage tanks. Each of these clusters is controlled by a local management station (LMS). Every LMS has information about the requirements (heat, cold and electricity) of the users connected to its cluster and the state of the utilities and water level of the storage tanks in its cluster. The EMS receives the information from the LMSs and sets the electricity input or output of every cluster in the network. With the information ordered by the EMS, the LMS set the run or stand-by of the utilities of its cluster. The benefits of the VU are the optimization of the utilization yield of the whole network, the high reliability of the electricity production, the complete control of the network for achieving the main aim of the EMS, the high velocity for assuming quick changes in the demand of the system and high integration of renewable energy sources, plus the advantages of the DG. This paper indicates the state of the art of the VU concept, analyses the projects that are being developed in this field and considers the future of the VU concept. Copyright (C) 2004 John Wiley Sons, Ltd.