Specific Organic Rankine Cycle (ORC) units dedicated to biomass-based power production have recently been developed through the introduction of novel organic working media and technology innovation. For small systems, ORC technology appears as an efficient alternative to conventional generation if also process waste heat can be exploited, as resulted in the last few years from the successful operation of several demonstration plants in Austria and Switzerland. The present study aims to investigate the impact of the introduction of ORC units in an industrial context from a system perspective, with particular reference to industrial districts, which are characterized by the concentration in small areas of a large number of medium- and small-sized firms. The paper focuses on the opportunity of combining ORCs, traditional Rankine cycles and multi-source district heating to meet energy requirements in an industrial district in North Eastern Italy. To this end, a mixed-integer linear programming model oriented to economical optimization of the system is developed and sensitivity analysis is carried out in order to determine the conditions for the expansion of biomass-based power generation in the analyzed industrial district and to evaluate potential for CO2 emission reduction. Copyright (C) 2004 John Wiley Sons, Ltd.