Recent advances in understanding of the surface energy balance of urban areas, based on both experimental investigations and numerical models, are reviewed. Particular attention is directed to the outcome of a COST-715 Expert Meeting held in April 2000,as well as experiments initiated by that action. In addition, recent complete parameterisations of urban effects in meso-scale models are reviewed. Given that neither the surface energy balance, nor its components, normally are directly measured at meteorological stations, nor are there guidelines for the set-up of representative meteorological stations in urban areas, this paper also provides recommendations to close these gaps.