The transition of the coal-based energy system is a challenge that can be solved by considering the integration of variable renewable energy sources and synergic effects between electricity, heating, cooling, transport and industrial sectors. This thesis focuses mostly on the integration of variable renewables using power-to-heat technologies in district heating systems. As 70-80% of total energy consumption in buildings takes the form of heat consumed for space heating purposes, spatial identification is crucial for planning and designing sustainable district heating systems. Hence, this thesis studies the quantification and validation of heat demand distribution within a small municipality using a newly developed Bottom-up and Top-down heat mapping method. The Bottom-up mapping method is based on building features such as surface floor area, building height, building use, and the heated area share. In contrast, the top-down mapping method relies on energy balances and population distribution densities. The results are shown spatially in grids with high spatial resolution. The finding shows that current models overestimate the heat demand, while with the proposed method, the error between existing and proposed models is negligible. The bottom-up heat demand maps are further improved by considering domestic hot water besides space heating demand. Domestic hot water should be taken into account when assessing district heating potential, as up to 30% of total final energy consumption in buildings in developed countries takes the form of heat used to prepare domestic hot water. Hence, this thesis develops a spatial-temporal method for annual hot water demand in conjunction with space heating demand while technically and economically assessing the expansion potential of the district heating systems. The main findings show that the actual district heating can be increased four times when excluding domestic hot water and five times when considering both space heating and domestic hot water demand. The thesis also considers the heat saving potential in buildings by developing a robust information socket of the urban building stock. Such information is used for assessing the impact of energy efficiency measures on space heating demand savings and CO2 emission reduction potential in the existing buildings based on a Geographical Information System tool. The findings show that space heat demand saving potential for scenarios 1 and 2 compared to the reference scenario was 50 % and 68.5%, respectively. As the transport and heating sectors account for the largest energy consumers in energy systems, their electrification plays a major role in decarbonising the said sectors. Many solutions support the decarbonization of energy systems by increasing the integration of variable renewable energy and utilizing the synergic effect between electricity, transport and heating sectors. In that regard, this thesis emphasizes the importance of utilizing heat pumps for individual heating solutions and electric vehicles in the transport sector as the main sources for enhancing the energy system flexibility and emphasizing their consequences in thermal power plant operational capacities and efficiencies. The findings show that electrification of heating and transport sectors significantly impacts variable renewable integration and CO2 emission reduction; hence, the same poses major challenges for the nominal operation of thermal power plants. Besides using power-to-heat technologies for individual heating, the thesis also concentrates on increasing the share of variable renewable using power-to-heat technologies in district heating systems. The main goal is to identify the influence of using district heating systems coupled with the power-to-heat technologies based on the flexible operation of coal-based thermal power plants and limited electricity system interconnections on the maximum integration of variable renewables. Results show that wind and PV power plant capacities installed in the existing Kosovo energy system, when operating in an isolated mode, are 450 MW and 300 MW, respectively. Additional capacities around 800 MW for wind and 385 MW for PV can be further integrated into this isolated energy system with the contribution of power-to-heat technologies coupled with thermal energy storage in district heating with a fixed capacity. Finally, the previous findings were used to asses sustainable energy transition pathways for coal-based energy systems. The method shows how the scaling-up in variable renewable energy sources and sector coupling (electricity and heating) while maintaining high flexibility in thermal power plants can shed light on achieving sustainability in a coal-based energy system. Five different scenarios have been created. Significant differences in annualized technology and emission costs can be observed between scenarios. In addition, scenario three seems to have the least cost in comparison to other scenarios. The total CO2 emissions for projected scenarios 1, 2, 3, 4, 5 in 2030 accounted for 4.78, 5.28, 4.48, 3.97 and 4.95 MtCO2/year. In addition, the total annual costs for projected scenarios 1, 2, 3, 4, 5 in 2030 accounted for 2168, 1611, 1993, 2479 and 2817 Mil. EUR respectively.