diff --git a/config.example.json b/config.example.json
index 7e9cbcb..315a4d8 100644
--- a/config.example.json
+++ b/config.example.json
@@ -1,13 +1,44 @@
 {
     "$schema": "https://veridian.runfoo.run/schemas/edge-config.json",
-    "version": "1.0",
+    "version": "2.0",
     "facilityId": "YOUR_FACILITY_UUID",
-    "backendUrl": "https://api.veridian.runfoo.run",
-    "backendApiKey": "YOUR_API_KEY",
+    "edgeId": "rpi-01",
+    "server": {
+        "url": "https://api.veridian.runfoo.run",
+        "apiKey": "YOUR_API_KEY",
+        "heartbeatIntervalSec": 60,
+        "syncIntervalSec": 300
+    },
     "sensorpush": {
         "email": "sensors@facility.com",
         "password": "YOUR_PASSWORD"
     },
+    "alerts": {
+        "enabled": true,
+        "cooldownMinutes": 15,
+        "thresholds": [
+            {
+                "sensor": "*",
+                "metric": "temperature",
+                "min": 60,
+                "max": 85
+            },
+            {
+                "sensor": "*",
+                "metric": "humidity",
+                "min": 40,
+                "max": 70
+            }
+        ]
+    },
+    "storage": {
+        "retentionDays": 30,
+        "maxRows": 100000
+    },
+    "dashboard": {
+        "enabled": true,
+        "port": 8080
+    },
     "sensorMappings": [
         {
             "sensorId": "123456.7890",
@@ -16,6 +47,5 @@
         }
     ],
     "pollingIntervalSec": 60,
-    "bufferMaxRows": 10000,
     "logLevel": "info"
 }
\ No newline at end of file
diff --git a/src/alerts.ts b/src/alerts.ts
new file mode 100644
index 0000000..7d79b7f
--- /dev/null
+++ b/src/alerts.ts
@@ -0,0 +1,142 @@
+/**
+ * Alert Engine - Threshold monitoring with cooldowns
+ * 
+ * Monitors sensor readings against configurable thresholds.
+ * Fires alerts locally and sends to server for notification fan-out.
+ */
+
+export interface ThresholdConfig {
+    sensor: string;  // Sensor ID or "*" for all
+    metric: 'temperature' | 'humidity' | 'vpd' | 'dewpoint';
+    min?: number;
+    max?: number;
+}
+
+export interface AlertConfig {
+    enabled: boolean;
+    cooldownMinutes: number;
+    thresholds: ThresholdConfig[];
+}
+
+export interface Alert {
+    id: string;
+    sensorId: string;
+    sensorName: string;
+    metric: string;
+    value: number;
+    threshold: number;
+    type: 'HIGH' | 'LOW';
+    timestamp: Date;
+}
+
+type AlertCallback = (alert: Alert) => void;
+
+export class AlertEngine {
+    private config: AlertConfig;
+    private cooldowns: Map<string, Date> = new Map();
+    private onAlert: AlertCallback;
+
+    constructor(config: AlertConfig, onAlert: AlertCallback) {
+        this.config = config;
+        this.onAlert = onAlert;
+    }
+
+    /**
+     * Check a reading against thresholds
+     */
+    checkReading(reading: {
+        sensorId: string;
+        sensorName: string;
+        temperature: number;
+        humidity: number;
+        vpd?: number;
+        dewpoint?: number;
+    }): Alert | null {
+        if (!this.config.enabled) return null;
+
+        for (const threshold of this.config.thresholds) {
+            // Check if threshold applies to this sensor
+            if (threshold.sensor !== '*' && threshold.sensor !== reading.sensorId) {
+                continue;
+            }
+
+            const value = reading[threshold.metric];
+            if (value === undefined) continue;
+
+            // Check high threshold
+            if (threshold.max !== undefined && value > threshold.max) {
+                return this.createAlert(reading, threshold.metric, value, threshold.max, 'HIGH');
+            }
+
+            // Check low threshold
+            if (threshold.min !== undefined && value < threshold.min) {
+                return this.createAlert(reading, threshold.metric, value, threshold.min, 'LOW');
+            }
+        }
+
+        return null;
+    }
+
+    /**
+     * Create and emit an alert if not in cooldown
+     */
+    private createAlert(
+        reading: { sensorId: string; sensorName: string },
+        metric: string,
+        value: number,
+        threshold: number,
+        type: 'HIGH' | 'LOW'
+    ): Alert | null {
+        const cooldownKey = `${reading.sensorId}-${metric}-${type}`;
+        const lastAlert = this.cooldowns.get(cooldownKey);
+
+        // Check cooldown
+        if (lastAlert) {
+            const cooldownMs = this.config.cooldownMinutes * 60 * 1000;
+            if (Date.now() - lastAlert.getTime() < cooldownMs) {
+                return null; // Still in cooldown
+            }
+        }
+
+        // Create alert
+        const alert: Alert = {
+            id: `${Date.now()}-${Math.random().toString(36).slice(2, 8)}`,
+            sensorId: reading.sensorId,
+            sensorName: reading.sensorName,
+            metric,
+            value,
+            threshold,
+            type,
+            timestamp: new Date(),
+        };
+
+        // Set cooldown
+        this.cooldowns.set(cooldownKey, new Date());
+
+        // Emit alert
+        this.onAlert(alert);
+
+        return alert;
+    }
+
+    /**
+     * Clear a specific cooldown (for testing or manual reset)
+     */
+    clearCooldown(sensorId: string, metric: string, type: 'HIGH' | 'LOW'): void {
+        this.cooldowns.delete(`${sensorId}-${metric}-${type}`);
+    }
+
+    /**
+     * Clear all cooldowns
+     */
+    clearAllCooldowns(): void {
+        this.cooldowns.clear();
+    }
+
+    /**
+     * Update thresholds at runtime
+     */
+    updateThresholds(thresholds: ThresholdConfig[]): void {
+        this.config.thresholds = thresholds;
+    }
+}
diff --git a/src/config.ts b/src/config.ts
index 0d876f2..a73aa0f 100644
--- a/src/config.ts
+++ b/src/config.ts
@@ -1,9 +1,10 @@
 /**
- * Configuration loader for Veridian Edge Agent
+ * Configuration loader for Veridian Edge Agent v2.0
  */
 
 import { existsSync, readFileSync } from 'fs';
 import { join } from 'path';
+import type { AlertConfig, ThresholdConfig } from './alerts';
 
 export interface SensorMapping {
     sensorId: string;
@@ -14,16 +15,35 @@ export interface SensorMapping {
 export interface EdgeConfig {
     version: string;
     facilityId: string;
-    backendUrl: string;
-    backendApiKey: string;
+    edgeId: string;
+
+    server: {
+        url: string;
+        apiKey: string;
+        heartbeatIntervalSec: number;
+        syncIntervalSec: number;
+    };
+
     sensorpush: {
         email: string;
         password: string;
         gateway?: string;
     };
+
+    alerts: AlertConfig;
+
+    storage: {
+        retentionDays: number;
+        maxRows: number;
+    };
+
+    dashboard: {
+        enabled: boolean;
+        port: number;
+    };
+
     sensorMappings: SensorMapping[];
     pollingIntervalSec: number;
-    bufferMaxRows: number;
     logLevel: 'debug' | 'info' | 'warn' | 'error';
 }
 
@@ -56,19 +76,52 @@ export function loadConfig(): EdgeConfig {
 function parseConfig(path: string): EdgeConfig {
     console.log(`📁 Loading config from: ${path}`);
     const content = readFileSync(path, 'utf-8');
-    const config = JSON.parse(content) as EdgeConfig;
+    const raw = JSON.parse(content);
+
+    // Handle both v1 and v2 config formats
+    const config: EdgeConfig = {
+        version: raw.version || '2.0',
+        facilityId: raw.facilityId,
+        edgeId: raw.edgeId || 'edge-01',
+
+        server: raw.server || {
+            url: raw.backendUrl || '',
+            apiKey: raw.backendApiKey || '',
+            heartbeatIntervalSec: 60,
+            syncIntervalSec: 300,
+        },
+
+        sensorpush: raw.sensorpush,
+
+        alerts: raw.alerts || {
+            enabled: true,
+            cooldownMinutes: 15,
+            thresholds: [
+                { sensor: '*', metric: 'temperature', min: 60, max: 85 },
+                { sensor: '*', metric: 'humidity', min: 40, max: 70 },
+            ],
+        },
+
+        storage: raw.storage || {
+            retentionDays: 30,
+            maxRows: raw.bufferMaxRows || 100000,
+        },
+
+        dashboard: raw.dashboard || {
+            enabled: false,
+            port: 8080,
+        },
+
+        sensorMappings: raw.sensorMappings || [],
+        pollingIntervalSec: raw.pollingIntervalSec || 60,
+        logLevel: raw.logLevel || 'info',
+    };
 
     // Validate required fields
     if (!config.facilityId) throw new Error('Config missing: facilityId');
-    if (!config.backendUrl) throw new Error('Config missing: backendUrl');
+    if (!config.server.url) throw new Error('Config missing: server.url');
     if (!config.sensorpush?.email) throw new Error('Config missing: sensorpush.email');
     if (!config.sensorpush?.password) throw new Error('Config missing: sensorpush.password');
 
-    // Defaults
-    config.pollingIntervalSec = config.pollingIntervalSec || 60;
-    config.bufferMaxRows = config.bufferMaxRows || 10000;
-    config.logLevel = config.logLevel || 'info';
-    config.sensorMappings = config.sensorMappings || [];
-
     return config;
 }
diff --git a/src/heartbeat.ts b/src/heartbeat.ts
new file mode 100644
index 0000000..c1a379b
--- /dev/null
+++ b/src/heartbeat.ts
@@ -0,0 +1,96 @@
+/**
+ * Heartbeat sender - Keep-alive signal to server
+ * 
+ * Sends periodic heartbeats so the server knows the edge device is alive.
+ * Server can detect missed heartbeats and alert operators.
+ */
+
+export interface HeartbeatData {
+    facilityId: string;
+    edgeId: string;
+    status: 'ok' | 'degraded' | 'error';
+    sensorCount: number;
+    bufferSize: number;
+    lastReading?: string;  // ISO timestamp
+    uptime: number;  // seconds
+}
+
+export class HeartbeatSender {
+    private backendUrl: string;
+    private apiKey: string;
+    private intervalId: ReturnType<typeof setInterval> | null = null;
+    private startTime: Date;
+    private getData: () => Omit<HeartbeatData, 'uptime'>;
+
+    constructor(
+        backendUrl: string,
+        apiKey: string,
+        getData: () => Omit<HeartbeatData, 'uptime'>
+    ) {
+        this.backendUrl = backendUrl.replace(/\/$/, '');
+        this.apiKey = apiKey;
+        this.getData = getData;
+        this.startTime = new Date();
+    }
+
+    /**
+     * Start sending heartbeats at the specified interval
+     */
+    start(intervalSec: number = 60): void {
+        if (this.intervalId) {
+            this.stop();
+        }
+
+        // Send initial heartbeat
+        this.send();
+
+        // Schedule periodic heartbeats
+        this.intervalId = setInterval(() => {
+            this.send();
+        }, intervalSec * 1000);
+
+        console.log(`💓 Heartbeat started (every ${intervalSec}s)`);
+    }
+
+    /**
+     * Stop sending heartbeats
+     */
+    stop(): void {
+        if (this.intervalId) {
+            clearInterval(this.intervalId);
+            this.intervalId = null;
+        }
+    }
+
+    /**
+     * Send a single heartbeat
+     */
+    async send(): Promise<boolean> {
+        try {
+            const data = this.getData();
+            const heartbeat: HeartbeatData = {
+                ...data,
+                uptime: Math.floor((Date.now() - this.startTime.getTime()) / 1000),
+            };
+
+            const res = await fetch(`${this.backendUrl}/environment/heartbeat`, {
+                method: 'POST',
+                headers: {
+                    'Content-Type': 'application/json',
+                    'Authorization': `Bearer ${this.apiKey}`,
+                },
+                body: JSON.stringify(heartbeat),
+            });
+
+            if (!res.ok) {
+                console.warn(`⚠️ Heartbeat failed: ${res.status}`);
+                return false;
+            }
+
+            return true;
+        } catch (error) {
+            console.warn('⚠️ Heartbeat error:', error);
+            return false;
+        }
+    }
+}
diff --git a/src/index.ts b/src/index.ts
index 4befa49..9488cfb 100644
--- a/src/index.ts
+++ b/src/index.ts
@@ -1,8 +1,11 @@
 /**
- * Veridian Edge Agent - SensorPush Integration
+ * Veridian Edge Agent v2.0 - SensorPush Integration
  * 
  * Main entry point for the edge device.
- * Polls SensorPush Cloud API and syncs readings to Veridian backend.
+ * - Polls SensorPush Cloud API
+ * - Monitors thresholds and fires alerts
+ * - Syncs readings to Veridian backend
+ * - Sends heartbeats for monitoring
  */
 
 import { SensorPushClient } from './sensorpush';
@@ -10,27 +13,51 @@ import { VeridianClient } from './veridian';
 import { BufferManager } from './buffer';
 import { startHealthServer } from './health';
 import { loadConfig, type EdgeConfig } from './config';
+import { AlertEngine, type Alert } from './alerts';
+import { HeartbeatSender } from './heartbeat';
 
 // Global state
 let config: EdgeConfig;
 let sensorPush: SensorPushClient;
 let veridian: VeridianClient;
 let buffer: BufferManager;
+let alertEngine: AlertEngine;
+let heartbeat: HeartbeatSender;
 let lastSync: Date | null = null;
+let lastReading: Date | null = null;
 let isRunning = false;
+let sensorCount = 0;
 
 async function main() {
-    console.log('🌱 Veridian Edge Agent starting...');
+    console.log('🌱 Veridian Edge Agent v2.0 starting...');
 
     // Load configuration
     config = loadConfig();
     console.log(`📍 Facility: ${config.facilityId}`);
-    console.log(`🔗 Backend: ${config.backendUrl}`);
+    console.log(`🔗 Backend: ${config.server.url}`);
+    console.log(`🔔 Alerts: ${config.alerts.enabled ? 'enabled' : 'disabled'}`);
 
     // Initialize clients
     sensorPush = new SensorPushClient(config.sensorpush);
-    veridian = new VeridianClient(config.backendUrl, config.backendApiKey);
-    buffer = new BufferManager(config.bufferMaxRows);
+    veridian = new VeridianClient(config.server.url, config.server.apiKey);
+    buffer = new BufferManager(config.storage.maxRows);
+
+    // Initialize alert engine
+    alertEngine = new AlertEngine(config.alerts, handleAlert);
+
+    // Initialize heartbeat sender
+    heartbeat = new HeartbeatSender(
+        config.server.url,
+        config.server.apiKey,
+        () => ({
+            facilityId: config.facilityId,
+            edgeId: config.edgeId,
+            status: 'ok',
+            sensorCount,
+            bufferSize: buffer.count(),
+            lastReading: lastReading?.toISOString(),
+        })
+    );
 
     // Authenticate with SensorPush
     await sensorPush.authenticate();
@@ -44,6 +71,9 @@ async function main() {
     }));
     console.log('🏥 Health server running on :3030');
 
+    // Start heartbeat sender
+    heartbeat.start(config.server.heartbeatIntervalSec);
+
     // Start polling loop
     isRunning = true;
     pollLoop();
@@ -73,7 +103,25 @@ async function pollAndSync() {
 
     if (readings.length === 0) return;
 
-    // 2. Map sensor IDs to room IDs
+    sensorCount = new Set(readings.map(r => r.sensorId)).size;
+    lastReading = new Date();
+
+    // 2. Check each reading against thresholds
+    for (const reading of readings) {
+        const mapping = config.sensorMappings.find(m => m.sensorId === reading.sensorId);
+        const sensorName = mapping?.name || reading.sensorId;
+
+        alertEngine.checkReading({
+            sensorId: reading.sensorId,
+            sensorName,
+            temperature: reading.temperature,
+            humidity: reading.humidity,
+            vpd: reading.vpd,
+            dewpoint: reading.dewpoint,
+        });
+    }
+
+    // 3. Map sensor IDs to room IDs
     const mappedReadings = readings
         .map(r => {
             const mapping = config.sensorMappings.find(m => m.sensorId === r.sensorId);
@@ -89,7 +137,7 @@ async function pollAndSync() {
         })
         .filter((r): r is NonNullable<typeof r> => r !== null);
 
-    // 3. Try to sync to backend
+    // 4. Try to sync to backend
     try {
         // First flush any buffered readings
         const buffered = buffer.getAll();
@@ -97,7 +145,7 @@ async function pollAndSync() {
             await veridian.postReadings([...buffered, ...mappedReadings]);
             buffer.clear();
             console.log(`📤 Synced ${buffered.length + mappedReadings.length} readings (including buffered)`);
-        } else {
+        } else if (mappedReadings.length > 0) {
             await veridian.postReadings(mappedReadings);
             console.log(`📤 Synced ${mappedReadings.length} readings`);
         }
@@ -109,9 +157,42 @@ async function pollAndSync() {
     }
 }
 
+/**
+ * Handle an alert from the alert engine
+ */
+async function handleAlert(alert: Alert) {
+    const icon = alert.type === 'HIGH' ? '🔥' : '❄️';
+    console.log(`${icon} ALERT: ${alert.sensorName} ${alert.metric} ${alert.type} (${alert.value} vs threshold ${alert.threshold})`);
+
+    // Send alert to server for notification fan-out
+    try {
+        await fetch(`${config.server.url}/environment/alert`, {
+            method: 'POST',
+            headers: {
+                'Content-Type': 'application/json',
+                'Authorization': `Bearer ${config.server.apiKey}`,
+            },
+            body: JSON.stringify({
+                facilityId: config.facilityId,
+                edgeId: config.edgeId,
+                alertType: `${alert.metric.toUpperCase()}_${alert.type}`,
+                sensorId: alert.sensorId,
+                sensorName: alert.sensorName,
+                currentValue: alert.value,
+                threshold: alert.threshold,
+                timestamp: alert.timestamp.toISOString(),
+            }),
+        });
+    } catch (error) {
+        console.warn('⚠️ Failed to send alert to server:', error);
+        // Alert still logged locally
+    }
+}
+
 function shutdown() {
     console.log('\n🛑 Shutting down...');
     isRunning = false;
+    heartbeat.stop();
     buffer.close();
     process.exit(0);
 }