With the increased interest in exploiting renewable energy sources for district heating applications, the economic comparison of viable options has been considered as an important step in making a sound decision. In this paper, the economic performance of several energy options for a district heating system in Vancouver, British Columbia, is studied. The considered district heating system includes a 10MW peaking/backup natural gas boiler to provide about 40% of the annual energy requirement and a 2.5MW base-load system. The energy options for the base-load system include: wood pellet, sewer heat, and geothermal heat. Present values of initial and operating costs of each system were calculated over 25-year service life of the systems, considering tax savings due to depreciation and operating costs, and salvage value of equipment and building and resale price of land in the cash flow analysis. It was shown that the natural gas boiler option provided less expensive energy followed by the wood pellet heat producing technologies, sewer heat recovery, and geothermal heat pump. Among wood pellet technologies, the grate burner was a less expensive option than powder and gasifier technologies. It was found that using natural gas as a fuel source for the peaking/backup system accounted for 37% of the heat production cost for the considered district-heating center. The results show that the cost of produced heat from wood pellet grate burner is well comparable to that of the natural gas boiler. Emissions of the systems are also calculated in this study. It is shown that the natural gas boiler for the base-load heat production would produce more than 4300 tonnes of GHG emission per year, while wood pellet burning systems are GHG neutral. Sensitivity analysis on various inputs to the economic model has been carried out. It was shown that 20% increase in capital cost of the natural gas base-load system or 1% decrease in wood pellet price inflation would make the wood pellet grate burner economically preferable to the natural gas boiler. Copyright (c) 2009 John Wiley & Sons, Ltd.