Reducing the energy consumption growth rate is increasingly becoming one of the main challenges for ensuring sustainable development, particularly in the buildings as the largest end-use sector in many countries. Along this line, the aim of this paper is to analyse the possibilities for energy savings in the construction of new buildings and reconstruction of the existing ones developing a tool that, in terms of the available heating technologies and insulation, provides answer to the problem of optimal cost effective energy consumption. The tool is composed of an unsteady heat transfer model which is incorporated into a cost-effective energy saving optimization. The unsteady heat transfer model uses annual hourly meteorological data, chosen as typical for the last ten-year period, as well as thermo physical features of the layers of the building walls. The model is tested for the typical conditions in the city of Skopje, Macedonia. The results show that the most cost effective heating technology for the given conditions is the wood fired stove, followed by the inverter air-conditioner. The centralized district heating and the pellet fired stoves are the next options. The least cost effective option is the panel that uses electricity. In this paper, the optimal insulation thickness is presented for each type of heating technology.