An exergy factor analysis of the Ludza city district heating system (DHS) in Latvia is performed in the research paper. Calculated results of exergy factor are analysed in order to understand which parameters of district heating mostly affect exergy factor. The algorithm of the exergy analysis for district heating network is elaborated and evaluated. From calculations, it can be concluded that in case of decreasing of ambient temperature the supply temperature rises and it leads to increasing of exergy factor. The results of the analysis are compared with similar heating system parameters in other countries.