Abstract A large amount of low grade energy is often wasted without heat recovery in the process industry. Over-the-fence heat integration for district heating (DH) can be suggested to utilize this waste heat and therefore alleviate the carbon footprint of the integrated energy system. The economic performance of over-the-fence process integration depends on the cost of fuel, electricity and distance for the transfer of waste heat to DH network. A new design methodology has been developed to systematically evaluate the economic benefit of integration of low grade heat with local DH networks. A site-wide analysis tool using site composite profiles is incorporated in the developed design method in order to identify the quality and quantity of low grade heat available from the site. The optimization framework developed identifies economically acceptable distance for the over-the-fence heat recovery from the industrial site to local community, subject to economic parameters and engineering constraints. A case study has been carried out to demonstrate the design methodology, and the results from the case study illustrate techno-economic and engineering barriers in practice for the implementation of low grade heat recovery beyond the site.