The majority of small district heating systems (DHS) in Poland are supplied with coal and do not have a status of efficient ones according to Energy Efficiency Directive. They should transform into efficient ones by taking an appropriate measures by the end of 2035. At the same time, a significant reduction of CO2 emissions is expected in this sector. One of the possible solution for such systems is to apply unites fueled with fuels alternative to coal such as biomass. Cost benefits analysis of implementation a biomass ORC (Organic Rankine Cycle) cogeneration unit in municipal district heating system of 22 MW thermal capacity is the subject of the paper. The research included building configuration scenarios of a heat source regarding ORC size and operation modes. Different economic inputs such as electricity, fuel and European Union Allowance (EUA) for CO2 prices as well as financial support mechanisms were considered. Economic indexes (Net Present Value, Internal Rate of Return and payback times) have been derived for both Polish and German conditions.