Highly efficient cogeneration and district heating systems have a significant potential for primary energy savings and the reduction of greenhouse gas emissions through the utilization of a waste heat and renewable energy sources. These potentials are still highly underutilized in most European countries. They also play a key role in the planning of future energy systems due to their positive impact on the increase of integration of intermittent renewable energy sources, for example wind and solar in a combination with power to heat technologies. In order to ensure optimal levels of district heating penetration into an energy system, a comprehensive analysis is necessary to determine the actual demands and the potential energy supply. Economical analysis of the grid expansion by using the GIS based mapping methods hasn’t been demonstrated so far. This paper presents a heat demand mapping methodology and the use of its output for the district heating network expansion analysis. The result are showing that more than 59% of the heat demand could be covered by the district heating in the city of Velika Gorica, which is two times more than the present share. The most important reason of the district heating's unfulfilled potential is already existing natural gas infrastructure.