The article discusses the evaluation of potential heat production options for a large-scale district heating system in Narva (Estonia). Heat is currently generated at the Balti Power Plant’s CHP unit using local oil shale mixed with biomass. The CHP unit consists of two circulating fluidised bed boilers and a reheat steam turbine. According to the development strategy, the district heating system is expected to achieve carbon neutrality in the future. Various options and parameter variations should be analysed. The following scenarios were compared: (1) baseline scenario featuring an existing CHP extraction steam turbine; (2) alternative Scenario I featuring a CHP backpressure steam turbine; and (3) alternative Scenario II featuring a CHP gas turbine. To evaluate the above scenarios, a comprehensive energy/exergy analysis was performed, and economic indicators were calculated. The primary energy consumed, as well as the heat and electricity generated, were all taken into account. Based on this analysis, a scenario was selected using multiple-criteria decision-making that will improve energy efficiency and reliability of the system.