A district heating and cooling system (DHC) is expected to be a promising energy-saving measure for high-density business areas in Japan. However, it has not been verified what advantages of the DHC are important for energy conservation. The clarification of this issue is supposed to contribute to improving the energy efficiency of the DHC. This paper focuses on the electric-driven heat-pump-type DHC, which uses only electricity as its energy source. An existing DHC plant has been selected for the case study, and its energy efficiency is examined by a simulation model that uses parameters derived from the measurement data. The simulation results for the plant reveal that the DHC exhibits an energy-saving effect of 29% for cooling when compared with the individual heat source system mainly due to the following two advantages: "economy of scale in chillers/heat pumps" and "thermal storage effect". Further, the energy-saving ratio for heating is only 5% since heat recovery chiller cannot be operated sufficiently due to the lack of cooling demand during winter. In addition, we have examined high-efficiency techniques such as the utilization of river water. As a result, potential energy-saving impact on the DHC is evaluated. (C) 2007 Elsevier B.V. All rights reserved.