Many energy policies set a goal of decreasing the carbon emissions of the energy sector by up to 100%, including the electricity grid. This is a long term and gradual process. Energy systems in cities will likely be the starting point for greenhouse gas emissions mitigation since they account for 80% of global carbon emissions. This paper analyses the impact on urban districts of decarbonizing the electric grid supply. A multi-objective optimization model has been developed that combines the optimal design and operation of distributed energy systems, the design of district heating (DH), electricity grid constraints based on linearized alternating current (AC) power flow and grid upgrade options. A number of scenarios were defined corresponding to different levels of renewable energy share in the electricity grid. For each scenario, we analyse the changes to the design and operation of the urban energy system, the impact on the district heating potential, and the impact on the operation of the distribution grid as well as the grid upgrade potential. The results showed that the renewable share of the grid has a large impact on the optimal solutions obtained. When the renewable share is below 55%, a lot of photovoltaic (PV) electricity has to be used to offset the carbon emissions from the grid. Conversely, when the renewable share is above 70%, the use of PV decreases and heating systems become electrified by producing heat with heat pumps (HP). District heating is used regardless of the renewable share in the grid, but as carbon emissions limits are tightened the potential of DH decreases. Only when the renewable share in the electricity grid is 100% it is possible to have a carbon-neutral district. In the carbon optimal solutions of each scenario there is no need for DH, but the grid has to be upgraded to enable electrification of the heating system. (C) 2017 Elsevier Ltd. All rights reserved.