For the most part, district heating demands can be met by an appropriate intergration of cogeneration and heat pumps units provided that advantages is taken of the fact that many urban regions are concentrated around surface waters. Despite the fact that the economics at the moment are unfavourable, substantial environmental improvements point to the promise of these concepts. Several district heating concepts using centralized and sometimes decentralized heat pumps are currently under study at the EPFL. A practical example is the EPFL heating plant which is equiped with two heat pumps operating with an excellent annual coefficient of performance of 4.5 and two gas turbines. Further advantages can be obtained by the use of a methodological approach which determines operational strategies which optimize the operation of the plant based on price rate structures and the users’ heating demands. Such a methodology coupled to operational research techniques has shown promising results.