Integration of shallow geothermal energy could effectively contribute to long-term improvement in the energy supply systems by slowing down the growth of energy consumption, changing the structure of used energy sources, and by modernizing communal energy infrastructure. Such integration is one way of addressing sustainability goals, ensuring better energy security and economic competitiveness, and making a contribution to environmental protection efforts. This paper examines the integration of local geothermal potential in the northern part of the Republic of Serbia and assesses the implications of using geothermal heat pump technology in a district heating system. This analysis considers different aspects of the proposed application and evaluates the environmental sustainability and viability of utilization of geothermal heat pumps for district heating. Energy, economic and environmental performance was assessed for infrastructure that supplies 1274 properties in collective residential building segment located in a densely populated city area. The assessment quantified performance in key energy, economic and environmental categories, focusing on the use stage of the system's life cycle. The main benefit of the geothermal heat pump system is the reduction of the inlet primary energy by at least 30% by avoiding the use of almost a million cubic meters of natural gas per year. This also results in a competitive energy cost of 17 EUR/MWh, an investment with internal rate of return of up to 38%, and a discounted payback period of 4.9 years. The geothermal heat pump system can bring energy and economic benefits but unfavorable environmental impacts, mainly due to the unfavorable electricity generation mix in the Republic of Serbia. The existing natural gas driven system was found to have lower impacts across all indicators but terrestrial eco-toxicity, natural land transformation and fossil depletion. In the climate change impact category, the existing system's impacts are 82% lower than those of the geothermal system. (C) 2018 Elsevier Ltd. All rights reserved.