Positive energy districts (PEDs) address the energy issues of unsustainable urban development by producing more renewable energy than they consume. However, the transformation of PEDs face challenges that require the application of new technologies. This article focuses on the role of digital twins and generative AI to explore how these technologies can support the development of PEDs in line with circular economic principles. Based on a case study of an EU Horizon R&D project, this article develops a framework for implementing generative AI-assisted digital twins for PEDs and provides decision support for their integration into 9R circular economic strategies.