District heating covers around 80 % of the heating demand in apartment buildings and 10 % in single-family homes in Sweden. In the year 2010 the total input of energy to the Swedish district heating grids was about 70 TWh, which corresponds to 11 % of the total energy input to the whole energy system in the country. Through the combined production of heat and power the CHP-plants often reaches an efficiency of 90 % from energy in the fuel to produced heat and power. In order to keep the efficiency high it is important for the owners of the plant to have good knowledge about the plants performance at different operation points. Strängnäs Energi AB initiated this diploma work together with FVB Sverige ab in order to come up with a program for short term planning of the production of heat and power at the company´s CHP-plant. The work consists of three main parts. The first part is an introduction to district heating and optimization of such systems and it also handles a short explanation of the district heating system in Strängnäs. The second part covers the performance tests that have been done at Strängnäs Energi AB´s CHP-plant. The performance tests were carried out in order to investigate how the plant is operating. The results from the tests show that the efficiency of the plant is very poor. This has its explanation in the losses in forms of combustible content in the bottom ash, which in some cases reaches over 4 %. The problems with the combustion have been known for a while at Strängnäs Energi AB, but they did not have any calculated value of the efficiency. The company is working hard in order to come up with good solutions for the combustion and therefore this is not included in the diploma work. Instead the third part of the diploma work is focused on developing of a model for short term production planning. The model was made in MS Excel and it consists of a number of power and mass balances over one day. The key to the calculations in the model is the calculation of the alfa-value. The alfa-value together with the power in the hot water condenser gives an iterative calculation. The hot water accumulator is then either charged or discharged depending on current electrical price, demand of district heating and the level in the accumulator. The results from the simulations done with the model shows that it is possible for Strängnäs Energi AB to earn between 0 – 20 000 SEK during one day if they operate their plant as suggested in the model.