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Hybridisation of district heating systems can contribute to more efficient heat generation through cogeneration power plants or through the share increase of renewable energy sources in total energy consumption while reducing negative aspects of particular energy source utilisation. In this work, the performance of a hybrid district energy system for a small town in Croatia has been analysed. Mathematical model for process analysis and optimisation algorithm for optimal system configuration has been developed and described. The main goal of the system optimisation is to reduce heat production costs. Several energy sources for heat production have been considered in 8 different simulation cases. Simulation results show that the heat production costs could be reduced with introduction of different energy systems into an existing district heating system. Renewable energy based district heating systems could contribute to heat production costs decrease in district heating systems up to 30% in comparison with highly efficient heat production technologies based on conventional fuels.