This study recognises the need to lower the levels of fossil fuel imports and increase energy efficiency in the heating sector in Ireland due to issues regarding security of supply and climate change. Ireland is heavily reliant on oil and gas to meet heat demands, and even though large scale District Heating (DH) has been proven to be an effective solution in other countries in Europe, particularly Scandinavia, it is currently not used in Ireland. The new EU Energy Efficiency Directive (2012/27/EU) puts more emphasis on energy efficiency in the heating sector, and under the Directive requirements, Ireland must carry out an assessment incorporating a cost-benefit analysis of the potential for DH in Ireland. If there is an excess of benefits over costs, adequate measures are required to be put in place to develop DH infrastructure and regional heat markets. With this in mind, this research paper conducts an in-depth hourly techno-economic energy system analysis, and consequent cost-benefit analysis, of a case study of a proposed large scale DH system in Dublin, Ireland. This kind of analysis of a DH system within a real life context is the first of its kind to be carried out in Ireland, to the knowledge of this author. The generality of the findings are deemed to be applicable to other areas in Ireland of similar or higher heat density and with similar heat demand profiles. The results show that DH is technically and economically feasible under current market conditions, and there are greater benefits than costs from a societal viewpoint. With this result, the study goes on to analyse the opportunities and barriers surrounding large scale implementation of DH in Ireland, and suggests policies and regulations which would allow the development of DH and regional heat markets in Ireland. The key findings show there is a need for coordinated, strategic, regional level sustainable energy planning in order to enact long term institutional changes surrounding DH. The results also show the need for short term financial supports designed specifically for sustainable and efficient heat production to influence market based investments.