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Energy efficiency has been increasingly discussed around the world due to the perception of its contribution to many issues like energy consumption, carbon emissions and others. In this context, demand side management is the most common way for energy efficiency improvement and consequent energy saving. However, in a changing scenario where renewable sources play an important role in energy supply, new approaches to energy efficiency looking to supply side may be very helpful on achieving a big amount of energy savings that can be added to those expected from demand side. This paper intends to propose a methodology for calculation and measurement of the overall energy efficiency for biomass cogeneration or combined heat and power plants. The calculation and measurement methods are focused on the principle of so called measurement and verification. The application of the proposed methodology can lead to continuous efficiency improvement programs both for cogeneration plants and generator groups connected to a grid. Its benefits are even beyond the generation agents purposes. Once generators develop a new paradigm of transparency, with real time performance data that can be accessed by other interested agents, such as customers or grid administrators, a contribution to the concept of smart grids will be made whilst relevant supply side performance information is disclosed to other parties.