The advantage of district heating systems compared to individual systems lies in their potential to diversify heat sources, foster greater system independence and reliability, and optimise heat energy production costs. This work evaluates the techno-economic rationale behind investing in district heating systems focusing on determining the threshold at which such investments become cost-effective. This includes indicators such as linear heat density [MWh/km] to ascertain the break-even point, alongside the calculation of the levelized sost of energy. Five simulation models of a heating system are developed and analysed for a designated area of the city of Ohrid (Republic of North Macedonia), focusing on existing buildings and their energy consumption patterns. Three scenarios incorporate public facilities such as schools, offices, and hospitals. Additionally, two more scenarios include these facilities along with 1,000 residential buildings to achieve higher linear heat density. These buildings are examined both as energy class D structures with a demand of 110 kWh/m2/year and as more efficient energy class C buildings with a heat demand of 70 kWh/m2/year, including for space heating and domestic hot water supply. The energy hub system integrates various components, such as solar thermal collectors, combined heat and power, and heat pumps, to meet heat demands while ensuring a balanced energy mix. Scenario 5 is identified as the most cost-effective, with a levelized cost of energy of 98 EUR/MWh, a linear heat density of 1363 MWh/km, and an annual heat demand of approximately 15 GWh.