Drying is one of the most energy intensive and common operations in the chemical and process industries. Scope for energy recovery is substantial, particularly from the latent heat of the exhaust moist air. Using real operating data from a major Swedish mill, optimal energy conservation strategies were investigated using different heat pump systems in paper drying. Simulation results are compared for compressor-driven and absorption heat pump systems. An absorption heat transformer was also investigated. A CH3OH-LiBr double-lift cycle would have a low COP value due to the low temperature of the moist air stream and the restricted temperature of the cooling water available. A total of 30 MW thermal equivalent is currently needed in the mill at a temperature of 75 degrees C for mixing-pits, district heating and a log store. Exhaust humid air at a temperature of 54 degrees C from only three of the paper machines was used in this study. SHPUMP simulations revealed that installing a mechanical heat pump unit using HFC 134a would result in a recovery of 22 MW due to the temperature level of this application. On the other hand, 12 MW can be recovered with an absorption heat pump. To optimize the operating conditions, H2O-NaOH was selected as the best of three based on exergy index criteria. Assuming a steam cost of 22 $/MW h and an electricity cost of 32 $/MW h, the pay-off periods would be 3.3 and 2.9 years for compressor-driven and absorption heat pump alternatives, respectively. (C) 1997 by John Wiley & Sons, Ltd. (Less)