Heating accounts for about half of the final energy demand in the member states of the European Union. The challenges of a transition to a sustainable heat supply vary greatly at the local level indicating the need for incorporating local data for determining solutions. Current studies vary in the inclusion of heat savings, the level of details, and energy efficiency improvements of heat supply. The interactions between the heating system and the rest of the energy system are often ignored. In this study, coherent methodological steps are proposed to identify, develop, and assess the pathways of sustainable heating systems at the local level. It combines data on the application of generic sustainable heating strategies with the collection and usage of local data and allows the analysis of the impacts of a heat transition on the local energy system. A case study is carried out in the city of Utrecht, the Netherlands. The computer tool EnergyPLAN is applied to simulate the current and future energy system in 2050, including three fossil fuels-free heating scenarios, that depict different share of collective and individual heating. The individual heating scenario leads to 17% of annual energy-saving in comparison to the future reference scenario while the mixed-options and collective heating scenarios achieve 7% and 3% respectively. The individual scenario is, however, the most expensive option as its annualized costs are 170% and 80% higher than the costs of the collective and mixed-options scenario. To achieve a fossil fuels-free heating system, annual costs per building was calculated to be 375, 665, and 1030 euro in the collective, mixed-options, and individual scenario respectively. It is concluded that the most techno-economic pathway is a mixture of energy savings, individual and district heating technologies. The optimal balance should be determined at a neighbourhood level.