Sustainability transformation of the heating sector is recognised as being essential for reaching climate and environmental targets while improving the quality of life in cities worldwide. Participatory strategic planning enabled by scenario methods can be an important tool to guide this transformation, but methods for qualitative scenario analysis supporting stakeholder participation must be further developed and tested in the context of different cities. This paper presents results from integration of urban energy system modelling into the participatory strategic planning process implemented in the city of Nis, which suffers problems typical of the heating sector in Serbia and the Western Balkans. The aim was to explore how the scenarios developed by local stakeholders could transform the Nis heating system by 2030. Five scenarios developed within participatory backcasting project and a BAU scenario were analysed in terms of decarbonisation, energy security and energy efficiency using Long-range Energy Alternatives Planning System (LEAP). A final scenario “Efficiency for the green future” designed by the stakeholders for implementation in the city included high standards of energy efficiency in buildings, increased share of renewables in the heating energy mix, expanding the district heating system, deploying smart technologies and green architecture. The LEAP model demonstrated that this final scenario could lead to achievement of the desirable future vision developed by stakeholders for Nis, through substantial improvements in energy efficiency and energy security, and to considerable emissions decreases by 2030 in comparison with the base year (2010) and the BAU scenario.