The present paper proposes two energy integration options, Option-1 and Option-2, to compare power generation and preheating scheme in sponge iron process. Option-1 accounts power generation whereas in Option-2 preheating of feed material, slinger coal and kiln air is considered. These options utilize heat of waste gas that exits the after burning chamber of the process, which is available from 994 degrees C to 250 degrees C. The process integration principles are applied to conserve energy in Option-1 and Option-2. For Option-1 8.97 MW power is generated using heat of waste gas, which gives payback period as 4.17 years. On the other hand, Option-2 consumes 37.4% and 4.7% less coal and water, respectively, in comparison to the existing system. The payback period for option-2 is 3.22 years. The feasibility analyses of these options are also discussed. Based on payback period preheating is more profitable option in comparison to power generation. However, when net profits of two options are compared, power generation option is more profitable. The results of the present study are compared well with that of published work. (C) 2017 Elsevier Ltd. All rights reserved.