Transition from fossil and nuclear fuels to renewable energy sources is a fundamental aspect of global and community level projects for sustainable development. The hypothesis of this study is that energy efficiency measures have significant potential to reduce the consumption of highly polluting fuels supplying the energy needs of the residential sector. The increasing use of renewable energy resources requires technical and economic changes in the energy sector to ensure a proper balance between supply and demand. Demand-side management methods consider various technologies, flexible price mechanisms, and human behaviour patterns to plan and implement policies intended to reduce and/or shift energy consumption to increase energy system flexibility and societal benefits. The research focuses on the residential sector in Hungary. With the Long-range Energy Alternative Planning (LEAP) software, a multidisciplinary analysis was conducted and four energy scenarios were designed in order to assess energy savings and responsive demand potential. The results demonstrated that approximately 70% of the final energy consumption for heat in the sector can be reduced. Up to 2981 MWh/year of the total electricity consumption of the research area can be utilised for strategic management with the proposed household retrofits.