Abstract In many countries, DH (district heating) covers a large share of the heat market. In these countries, the best locations for DH systems have already been found. Therefore, the challenge for these countries is to find expansion potentials for existing DH. The expansion to less ideal areas requires more detailed modelling that takes the geographic placement of buildings and the differences among DH systems into account. In the present article, a method for assessing the costs of DH expansions has been developed. The method was applied in a GIS (geographic information system) model that consists of three parts and assesses the costs of heat production, distribution, and transmission. The model was also applied to an actual case in order to show how it can be used. The model shows many improvements in the method for the assessment of distribution costs and transmission costs. Most notable are considering distribution costs based on the geographic properties of each area and assessing transmission costs based on an iterative process that examines expansion potentials gradually. The GIS model is only applicable to a Danish context, but the method itself can be applied to other countries.