Abstract District heating (DH) enables the utilisation and distribution of heating from sources unfeasible for stand-alone applications and combined with cogeneration of heat and power (CHP), has been the cornerstone of Denmark’s realisation of a steady national primary energy supply over the last four decades. However, progressively more energy-efficient houses and a steadily improving heat pump (HP) performance for individual dwellings is straining the competitive advantage of the CHP–DH combination as DH grid losses are growing in relative terms due to decreasing heating demands of buildings and relatively high DH supply temperatures. A main driver for the DH water temperature is the requirements for domestic hot water (DHW) production. This article investigates two alternatives for DHW supply: (a) DH based on central HPs combined with a heat exchanger, and (b) a combination of DH based on central HPs and a small booster HP using DH water as low-temperature source for DHW production. The analyses are conducted using the energyPRO simulation model and are conducted with hourly varying factors; heating demands, DH grid losses, HP coefficient of performance (COP) and spot market prices in order to be able to analyse the relative performance of the two options and their performance over the year. Results are also compared to individual boilers and individual HPs. The results indicate that applying booster HPs enables the DH system to operate at substantially lower temperature levels, improving the COP of central DH HPs while simultaneously lowering DH grid losses significantly. Thus, DH performance is increased significantly. Additionally, performance for the DH HP with booster combination is considerably better than individual boiler or HP solutions.