A simple and economic engine concept is proposed as an alternative to the conventional heat engine.The main innovative character of the project is determined by the conceptual approach toward technological solution of the challenging problems of heat engines with external heat supply. This approach includes the use of working fluids changing phase, with crucial benefits in terms of:• liquid working fluid, being incompressible, decreases remarkably dead volumes and their influence on the efficiency;• substantial reduction of the dead volume permits using of external heat exchangers and thus to solve the scale up problem;• heat transfer can be improved because of the boiling and condensation processes;• engines with liquid working fluid can be made much safer since in operation volume of gas/vapor phase is smaller whereas out of operation a high-pressure gas phase can be absent at all;Up-Therm engine will be assembled in a micro-CHP (3 kW) prototype, which will demonstrate that:• Up-THERM engine cost is much lower (< 500 €/kW) than other technologies (ICE, Stirlin, micro-turbine), thanks to its design simplicity;• Specific power (kg/kW) is in line with the other product;• Mainly for low power size the electrical efficiency of the innovative engine is incomparable. Making a comparison with the commercially available system with a power < 3 kW, the Up-THERM efficiency is almost double.The tangible outcomes of the Up-THERM project, available to SME partners for exploitation, are:1) Working fluid design for the thermal engine, with a proper characterization and performance evaluation.2) Engine executive design of Up-THERM unit, with an integrated control strategy. The Up-THERM unit has to achieve the following targets: Pel = 1 – 3 kW; Thermal efficiency = 35% at least; Maintenance interval = 50,000 hour.3) A 1-3 kWel Up-THERM CHP prototype, to be installed and tested to assess the real performance. The cost target of the whole CHP system has been fixed