The transition from a natural gas-based energy system to renewable energy sources has become a crucial consideration in both national-scale planning processes and local-scale energy system planning. Research has been conducted to seek technical solutions for a specific district of a university campus to implement a smart energy system with multiple energy sources, storage systems and demand-side management. The energy community solutions have been modelled based on the system dynamics approach to simulate the performance of the energy system and identify the most sustainable energy conservation and generation options. The solutions for the transformation of Energy Island to an Energy Community include power generation by building integrated solar panels, with different power storage alternatives, such as batteries, electric vehicles, hydrogen, and fuel cells. Additionally, a wind park located outside the urban area with hydrogen storage has been evaluated due to the urban area conditions. The simulation also evaluates the potential for heat recovery and waste heat integration from the data centre, wastewater, and cooling systems to cover the heat demand. The interlinkage with demand-side management through improved building management systems provides an opportunity to increase renewable energy sources utilisation rates and improve overall energy efficiency. To provide a holistic overview of the future development of the urban area, the research also compares the connection to the district heating network. The interactive simulation interface has been developed based on the system dynamics model which provides a platform for stakeholders to evaluate different sustainable energy generation alternatives. By simulating the performance of the energy system, it is possible to identify the most efficient and cost-effective ways to generate and use energy.