This work presents the design and the thermo-economic optimization of a novel layout of a 5th generation district heating and cooling network, for a residential district located in the Pantelleria island (South of Italy). The research focuses on a novel arrangement based on two bidirectional low-temperature neutral rings. For both rings, the fluid temperature is controlled by means of two groups of heat pumps cooled by seawater. The investigated layout also includes wind turbines and photovoltaic panels for power production. This layout will be used as a driver to promote the transition from the present centralized energy paradigm to a novel one, based on small-scale distributed generation integrated with renewables. The paper aims at evaluating the energy, eco-nomic and environmental savings achieved by this novel layout. A thermo-economic optimization is also implemented in order to determine the set of design/operating variables, maximizing system economic profit-ability. To this scope, a detailed approach is implemented, developing a dynamic simulation model of the system in TRNSYS 17. The developed simulation tool is able to mimic the real time operation of the system, for whatever weather condition, boundary and/or design variable. The results of the simulations show that the proposed layout achieves significantly positive results, with a primary energy saving and avoided greenhouse gases emissions equal to 133% and 134%, respectively. The economic profitability of the system is limited with the payback period close to 15 years, due to the high capital cost of the plant. The renewable electric production of the plant meets 57% of the district demand, although only 37% of this amount is self-consumed by the district. The study also includes a sensitivity analysis suggesting to limit the capacities of solar and wind fields to reduce the electricity in excess sold to the grid.