On a local and global scale, wastewater collection and treatment plants are significant energy consumers and have a major impact on the environment and economy of many municipalities. Decentralization looks to be a promising option to address the sustainability issues of wastewater management systems since it focuses on on-site wastewater treatment as well as local recycling and reuse of domestic wastewater resources. In addition, Blackwater (BW) and Kitchen Refuse (KR) are household wastes with a high organic content that can be used as substrates for anaerobic co-digestion processes to recover biogas as a source of energy. The research objective was to analyze a source separation decentralized BW and KR treatment system in which the energy is recovered from BW and KR co-digestion and digestate gasification. The coupling of biological and thermal technologies allows for the complete conversion of wastes into energy and biochar, eliminating sludge disposal. A simplified anaerobic digestion model was developed and implemented to simulate the biogas production potential. The simulation is based on a mathematical model using biomass, organic substrate, and biogas mass balances. The model was implemented in the INSEL simulation environment, and experimental data from the literature was used for validation. The results of the simulation match the experimental data well. Using the model, the energy consumption and generation potential of anaerobic co-digestion of BW and KR were assessed. Moreover, a greywater reuse system was investigated considering the same number of residents within an eco-district. It could be shown that conventional WWT systems require more energy and lead to more CO2 emissions than the greywater reuse system.