The heating and cooling sector has been recognised as a priority to achieve the decarbonisation and energy efficiency targets. Heating and cooling in the built environment accounts for almost 40% of the total final energy demand. Since the heat sector has strong interconnections with others it is difficult to study separately. This report is thus focusing on the integration of the heat and power sector and how an effective integration can meet the energy efficiency and the climate change mitigation targets.The first part of the study analyses the heating sector focusing on the built environment describing its detailed energy break down, and related costs, emissions and efficiencies. The concept of system integration of heating and power is analysed presenting its merits and also its challenges. The second part of the study focuses on a detailed model of the European power system. Two main energy transitions of the heat sector were examined from the power system perspective, namely electrification of heat and efficient heat and power production via cogeneration and district heating networks.