An energy cost allocation system records the energy consumption of a building and divides the overall energy costs between the flats. Because the indoor temperatures of rooms are usually not equal, static heat flows between flats cannot be avoided. Hence, in order to ensure fair energy costs per flat the system should be able to determine the static heat flows, preferably without utilising in situ measurements. This paper presents a new method for estimating static heat flows between neighbouring rooms. The approach is theoretical, focusing only on heat transfer issues. Energy cost allocation is not considered. The approach is based on the parametric model describing thermal behaviour of an occupied space. The model is created for each room of a building. Parameter values are identified using real-time measurements collected by a building automation system from each room and its environment. The tuning of parameters takes a few days using a 15-min sampling time. A prerequisite for successful system identification is the overall control of the room temperatures. All test runs are performed in a simulated office hotel using the TRNSYS simulation program. The results are encouraging, but further research is needed, especially in a real building environment. (C) 2006 Elsevier B.V. All rights reserved.