The economical sustainability of DH compared to individual heating systems depends on the cost of producing heat, transporting and distributing it. Assessing economically sustainable potential of district heating DH thus requires the ability to combine this costs, detecting the relative distance of sources and demands and the density of demand, comparing it to the alternative solution. In this work we present an open model, based on the Oemof modelling framework, which is able to take into account the possibility of connecting sources and demands on national scale level with a high spatial resolution. The model considers the investment and operating costs of production and distribution of heat in competition with the individual heating systems costs specific to each area. The end result is the most economically viable heat supply configuration, identifying the demand shares where the most cost-effective solutions are individual systems or DH and its composition in terms of energy sources. The model is part of the method used for the assessment of district heating potential in Italy. The latter is based on GIS maps of both energy demand, waste and renewable heat sources. Of the 114 TWh of potential demand for DH, 38 TWh are those that the optimisation suggests could be economically served by DH. The composition is mostly waste heat, 22 TWh, geothermal heat, 11 TWh and a minority of solar thermal, 2 TWh with 3 TWH of natural gas CHP back up.