In nowadays, increased energy efficiency in buildings and reduced thermal energy consumption requires innovative solutions and appropriate district heating system development planning process. 4th generation district heating system is one of the key solutions for improved overall system efficiency by decreased heat losses, improved heat generation efficiency, more efficient use of renewable energy sources and other advantages. The article describes the approach and the methodology for development of strategy to transform the existing DH system to 4GDH system particularly in cases with low DH systems loads. Two factors (low heat load and low temperatures) are becoming more and more actual. The article analyses the transformation process of the particular small-scale DH system in a parish located in the East part of Latvia. As a result, several transformation scenarios are identified. The technical solutions include replacement of a boiler, heating network reconstruction, heat supply temperature lowering and solar panel installation. Further technical analyses is carried out for system development evaluation and strategy implementation. Results shows that it is essential to evaluate the future energy efficiency measures in buildings when such small scale system is evaluated as it results in lower heat density and higher specific heat losses.