Smart energy cities have a potential to lead the transition from fossil age into the age of renewables. After a theoretical background is presented, of why the transition is necessary and what steps need to be taken in that direction, this paper brings insight into the paradigm of smart cities. The focus is set on the smart building as its fundamental building block. Fifteen cases of turning Norwegian and Croatian households into smart ones have been analyzed. Those are various combinations of consumption, generation and storage options. Expenses and revenues in case of implementing such smart households are presented by conducted cost and benefit analysis, as well as profitability of such projects.This assignment is realized as a part of the collaborative project "Sustainable Energy and Environment in Western Balkans" that aims to develop and establish five new internationally recognized MSc study programs for the field of "Sustainable Energy and Environment", one at each of the five collaborating universities in three different WB countries. The project is funded through the Norwegian Programme in Higher Education, Research and Development in the Western Balkans, Programme 3: Energy Sector (HERD Energy) for the period 2011 - 2014.