In 2018, EU launched the programme “Positive energy districts and neighbourhoods for sustainable urban development” with an aim to support the planning, deployment and replication of 100 Positive energy districts (PEDs) by 2025. This is an ambitious target considering the various challenges on implementing PEDs. This paper, based on literature review, provides an overview on the challenges and possibilities on the three main components of PEDs; energy production, energy efficiency and energy flexibility.