This work presents the transition of Western Macedonia from a lignite-dominated energy model to a sustainable system based on renewable resources, with particular emphasis on the interlinked roles of policy, regulation, and financing. The analysis is centered on the utilization of biomass and residual waste for district heating applications, highlighting the contribution of the Just Transition Fund and the Greek Green Fund. The study also evaluates the regulatory and institutional frameworks that either support or hinder renewable energy deployment, while embedding the principles of circular economy and cross-border cooperation. The insights derived serve as a reference point for regions undergoing similar post-coal transitions, offering a comprehensive roadmap for sustainable energy integration underpinned by policy alignment and financial cohesion.