Over the last decades, district heating has been under development, especially the technologies like heat pumps, solar thermal and cogeneration. However, there is still a long way to go regarding regulation, legislation and market liberalization, which varies across countries and regions. The objective of this work is to investigate the potential benefits of decentralized district heating systems in residential areas. By studying a case study of EnergyLab Nordhavn, a residential area in Copenhagen, Denmark, the paper compares the market out-comes of decentralized systems such as community markets to the centralized pool market currently in practice, under the EMB3Rs platform. The study focuses on key market outputs such as dispatched production, revenues, and daily consumption patterns. Additionally, the paper examines the impact of advanced features such as flexible heat consumption and network awareness in the market. The results of this research suggest that decentralized district heating systems have the potential to improve market outcomes and increase energy efficiency in residential areas. This work is supported by the European Union’s Horizon 2020 through the EU Framework Program for Research and Innovation, within the EMB3Rs project under agreement No. 847121.