In this paper the energy and exergy performance of a social dwelling of a multi-family building from the 1960s in Bilbao (Spain) is presented and various improved energy concepts based on exergy principles are proposed and investigated. The aim of this paper is to explore and demonstrate the usefulness of the exergy approach in the assessment and development of an energy system for the dwelling under consideration. The total energy supply system is analysed, including the demand (space heating, domestic hot water and electricity), the system components (for conversion, storage and distribution) and the energy input from energy resources (primary energy and renewable resources). The study includes a comparison of the primary energy input of all cases considered and an analysis of the energy and exergy losses of each system component. The study has shown that the exergy analysis reveals thermodynamic losses that are not revealed using energy analysis and secondly, that the development of an improved energy system based on exergy principles has resulted in a significantly reduced primary energy input compared to the reference situation. (C) 2012 Elsevier B.V. All rights reserved.