One of the important issues related to the implementation of future sustainable smart energy systems based on renewable energy sources is the heating of buildings. Especially, when it comes to long‐term investment in savings and heating infrastructures it is essential to identify long‐term least‐cost strategies. With Denmark as a case, this paper investigates to which extent heat should be saved rather than produced and to which extent district heating infrastructures, rather than individual heating solutions, should be used. Based on a concrete proposal to implement the Danish governmental long‐term target of becoming completely fossil‐free by 2050, this paper identifies marginal heat productioncosts and compares these to marginal heat savings costs for two different levels of district heating. A suitable least‐cost heating strategy seems to be to implement savings in new buildings and buildings which are being renovated anyway. This will decrease the net heat demand of space heating and hot water by approximately 50% compared to the present level, while the implementation of heat savings in buildings which are not being renovated hardly pays. Moreover, the analysis points in the direction that a least‐cost strategy will be to provide approximately 2/3 of the heat demand from district heating and the rest from individual heat pumps.Keywords: Energy Efficiency, Renewable energy, Heating strategy, Heat savings, District heating, Smart energy
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