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Using an integrated demand-supply optimization model, this work investigates the potential for flexible space heating demand, i.e., demand response (DR), in buildings, as well as its effects on the heating demand and the operation of a district heating (DH) system. The work applies a building stock description, including both residential and non-residential buildings, and employs a representation of the current DH system of the city of Gothenburg, Sweden as a case study. The results indicate that space heating DR in buildings can have a significant impact on the cost-optimal heat supply of the city by smoothing variations in the system heat demand. DR implemented via indoor temperature deviations of as little as +1 °C can smoothen the short-term (daily) fluctuations in the system heating demand by up to 18% over a period of 1 year. The smoothening of the demand reduces the cost of heat generation, in that the heat supply and number of full-load hours of base-load heat generation units increase, while the number of starts for the peaking units decreases by more than 80%. DR through temperature deviations of +3 °C confers diminishing returns in terms of its effects on the heat demand, as compared to the DR via +1 °C.

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