The high potential for utilization of co-generation power plants in the cities of North-Eastern Europe is illustrated in this paper. The features associated with climatic and economic factors are analyzed. The paper describes the methods for demand forecasting used in the case study and the chosen criteria and methods for economic assessment of different energy supply alternatives. The results of economic assessment support the decision about the optimal placement and parameters of CHPs, including small-scale CHPs. Application of cooperative Game theory in order to support the decisionmaking in the market environment is described and demonstrated on the real life case study.