This paper presents system simulation and parametric study of the demonstration system of decentralized cooling in district heating network. The monitoring results obtained from the demonstration were calibrated and used for parametric studies in order to find improved system design and control. This study concentrates on system simulation studies that aim to: reduce the electricity consumption, to improve the thermal COP's and capacity if possible; and to study how the system would perform with different boundary conditions such as climate and load. The internal pumps inside the thermally driven chiller (TDC) have been removed in the new version TDC and implemented in this study to increase the electrical COP. Results show that replacement of the fourth with the fifth generation TDC increases the system electrical COP from 2.64 to 5.27. The results obtained from parametric studies show that the electrical and thermal COP's, with new realistic boundary conditions, increased from 2.74 to 5.53 and 0.48 to 0.52, respectively for the 4th generation TDC and from 5.01 to 7.46 and 0.33 to 0.43, respectively for the 5th generation TDC. Additionally the delivered cold increased from 2320 to 8670 and 2080 to 7740 kWh for the 4th and 5th generation TDC's, respectively. (C) 2011 Elsevier Ltd. All rights reserved.