The objective of this paper is to determine the technical and economic feasibility of an alternative energy system in which the urban water system functions as a source for sustainable energy supply. It is demonstrated that aquifer thermal energy storage supplemented with surface water heat collection in summer, yields sufficient heat to compensate total heat demand of a residential district. Using the urban water system as energy source makes natural gas supply obsolete, provides a CO2 reduction of 60% and is preferable in terms of costs compared to conventional gas based central heating installations. The feasibility of the urban groundwater system, urban surface water system, and the economic feasibility are determined in this paper. The local groundwater feasibility to supply the design discharge is determined by soil and aquifer characteristics from the national groundwater database, reference projects, and bore-hole data. A heat balance model is used to quantify effects on the water system. Internal rate of return calculation for the investments and full lifetime exploitation costs are used to determine the economic feasibility of the concept. In summer, there is a net water temperature decrease of 1.5-1.6 °C. Water quality and ecological improvement take place because a lower temperature results in increasing oxygen content. Moreover, the expected water temperature increase by climate change can be prevented. The concept is economically feasible. Considering the full lifetime and all investment and exploitation costs, the concept is more profitable than a conventional system.