A method for estimating the heat demand of different types of dwellings is described. Furthermore, an optimal heat supply mix for a local area was determined considering gas and electricity prices and the unique characteristics of the local area in terms of the heat demand and potential heat supply options. These methods were demonstrated on the local authority area of Neath Port Talbot in the UK. The estimated heat demand was validated against real data. The modelling results obtained show that significant financial support is required for low carbon heating technologies such as heat pumps and district heating networks for them to play a major role in the decarbonisation of heat.