In order to meet regional and national climate neutrality goals, decentralisation has placed the energy sector under local government governance, pushing municipalities to take a more active role in energy planning and sector decarbonisation. This study attempted to assess the extent to which municipal efforts have been successful in the adaptation of low-carbon energy systems, and what is the current state of municipal initiatives concerning regional energy transitions. A composite index was constructed, incorporating nine indicators grouped into three main dimensions of sustainable municipal energy transition: energy efficiency, energy decarbonization, and smart energy system deployment. Five municipalities of the Baltic Sea Region were analyzed, and their energy transitions were assessed: the Gulbene municipality (Latvia), Tukums municipality (Latvia), Taurage municipality (Lithuania), Tomelilla municipality (Sweden), and Wejherowo municipality (Poland). Using a benchmarking approach, the main challenges and opportunities of energy transition in the selected municipalities were identified, which could be used as signals in developing concrete municipal sustainability action plans.