Abstract
Factors affecting both the Estonian and Serbian district heating improvement are analysed, including geographical and climate factors, as well as economic and legal factors. This analysis is added by evaluation of main technical and economic parameters related to the district heating networks from the case studies (Estonian Narva city and Serbian Kragujevac district heating). This analysis uncovered the weakest points of Kragujevac district heating and explain why district heating is not considered as sustainable and environmentally friendly heating option.