The European Directive on Energy Performance of Buildings (EPBD) imposes the adoption of measures for improving the energy efficiency in buildings. These measures should take into account the local weather conditions as well as internal thermal environment and cost-effectiveness. In this respect, Italy is a very interesting benchmark. For Northern Italy, the climatic context is particularly difficult to deal with cold winters and hot summers. The legislations are changing very rapidly, but has not fully adapted to the local context. The considered methodology still involves winter heating while summer cooling is addressed in incomplete and inadequate ways. The energy issue is addressed only partially as final energy consumption, but with little attention to LCA. Moreover, the belief that the buildings with high energy savings are too expensive, and therefore not attractive from economic point of view. For these reasons, it is very important to develop case studies to demonstrate the effectiveness of sustainable energy in architecture, according to a holistic approach. This paper describes a detailed techno-economic analysis for Borgo Solare project, an extremely advanced and innovative residential settlement designed on sustainable architecture concepts. One of the most innovative aspects of the project is that it is not just an experimental operation but Borgo Solare is a real urban district, which will be built without public funds and should be inhabited by common people. Excellent energy performance, therefore, must be accompanied by affordable market prices. The energy and economical analysis is presented taking into account also the embodied energy of the building. The results on the performance of a sample building (case study) of this settlement are reported, according to different construction standards: prior to EPBD, present from the EPBD and more efficient developed specifically for the project. It has been shown that using the better design practices and technologies the higher initial embodied energy in a low energy building could quickly paid back during its life span. The economic analysis, in the same way, evidences that higher initial investment in case of energy efficient building could become economically convenient during the life span of the building. This kind of analysis is essential to determine the actual sustainability of a building. (C) 2009 Elsevier Ltd. All rights reserved.