Roughly, a 70% of the total electricity production in Greece is covered by the combustion of domestic lignites. The major part of the lignite thermal power plants is assembled in northern Greece, where the climatic conditions require considerable heating loads to meet the demands in heating and hot water for use in the domestic and tertiary sector. Since 1993, these needs are covered in the city of Kozani through the modern installation of a district heating systems. The system utilises part of the produced steam in the 1200MWel lignite power station of Ag. Dimitrios, which is located 18 Km from the entrance of the city. The peak heating load exceeds the 125 MWth , with an annual demand of roughly 230.000 MWh. The annual amount of heat is produced by 90% in the lignite power plant and by 10% in an 80 MWth peak load unit, feeding with oil ar alternatively LPG. The aim of this paper is to present the installation of the district heating system in Kozani, focusing on the systems of rational management of energy, on the environmental and economic benefits from the operation to date, as well as on the prospects of the dissemination of experience to other cities in Greece.