The energy power systems are facing major challenges as fossil fuel generation is replaced with renewable generation, which is often characterised by variable behaviour. This increases the need for resources to be used to guarantee voltage and frequency stability, to deal with congestion management and to ensure the compliance with power quality standards. At the same time, there is an increasing number of local, small-sized generation, flexible demand and storage systems that are often located at distribution level. These resources could potentially be able to provide network services if they are aggregated effectively. However, to achieve this, the roles of the diverse network stakeholders – transmission systems operators (TSOs), distribution systems operators (DSOs) and aggregators – should be reshaped. In tandem with this, the way real-time electricity markets are organised also needs to be adapted to reflect the new operating paradigm. The SmartNet project (http://smartnet-project.eu/) aims to investigate different solutions to optimise the coordination between TSOs and DSOs with the purpose of improving the grid monitoring and the participation of resource located in the distribution grid in ancillary services. Within this project, three physical pilots are implemented in Italy, Denmark and Spain to determine new practical solutions. The subject of this paper is the Italian pilot, realized by a consortium composed by RSE, Terna (TSO), local DSO Edyna, Siemens and Selta in order to develop, implement and test in field technological devices to demonstrate that a smart management of the entire electrical grid, with the coordination of all the actors involved, could help to face new challenges. In particular, the interaction and the collaboration between TSO and DSO could improve the observability of the grid and allow investigating and defining needs, opportunities and feasibility to employ the potential contribution from all the resources connected in the transmission and distribution grid. In this way, the electrical system could be more flexible and more optimizable. In terms of technology, the Italian pilot project aims to implement new devices in order to improve the observability of the DSO’s grid and to enable flexible generation to provide system services. In particular, the main functionalities regard: The acquisition of real time information about the operational state of the power plants located at distribution level The estimation of the production fed into the power grid by unmonitored plants The aggregation of real time data at the interconnection point MV/HV provided by the DSO to the TSO The voltage regulation by generators connected to HV and MV levels The power/frequency regulation (Automatic Frequency Restoration Reserve – aFRR) by generators connected to MV grid The purpose of the present paper is to submit the achievements of the demonstration project realized in Italy during the first two years and to describe the ICT solutions developed by Siemens and Selta in order to fulfill the above functionalities.