Modern district heating (DH) systems should be based on renewable energy sources (RES), and this include the electricity used for driving pumps and covering the auxiliary power for the heat source. This paper proposes an innovative solution for a cogeneration (CHP) source for a DH network, consisting of a biomass gasification unit, a heat recovery system, a high temperature purification unit and a Stirling engine for generation of electricity. Thermodynamic analyses were performed for a 1.5 MW system in biomass chemical energy; the electric power ranges from 20.57 to 103.40 kW(el) and heat power from 1128.54 to 880.27 kW(th). The overall efficiency of the system eta(el+q) is in the range from 76.6 to 65.6%. The limits of the self-sufficiency of the proposed solution were determined (gamma parameter). Annual production of heat and electricity in the DH network strongly depends on the type of network (alpha), the assumed manner of operation of the CHP source and its operating time (tau(op). For the selected system, economic analysis was made via dynamic methods, e.g., NPV. Proposed system proved to be an interesting solution, especially when utilizing waste biomass, that can be 100% based on RES. System is economically viable only under certain conditions. (C) 2017 Elsevier Ltd. All rights reserved.