An important part of the world's energy is used for space cooling and heating of buildings. Its minimization has great energy saving potential. An important part of the heat exchange between buildings and the ambient surrounding is due to convective and radiative heat flows. In this study detailed building energy simulation (BES) is used to analyse the effect of neighbouring buildings on these heat flows and their influence on the space cooling and heating demand of buildings. BESs were conducted for stand-alone buildings and buildings in street canyon. This study demonstrates the importance of accounting for the urban microclimate for the prediction of the energy demand of buildings. With the proposed model most of the thermal effects of the urban microclimate can be captured and quantified on street canyon scale. Due to multiple reflections more solar and thermal radiation is absorbed at the facades of buildings in street canyons than at facades of stand-alone buildings. These effects cause higher surface temperatures in street canyons leading to higher space cooling and lower space heating demands. Other reasons are the lower convective heat transfer coefficients in street canyons, the reduced removal of heat from street canyons and the urban heat island effect. (C) 2012 Elsevier B.V. All rights reserved.