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Graphical abstract Highlights • Proposed hybrid heat recovery system for efficient energy utilization of spray dryer. • Proposed new performance indicator to assess sustainability in heat recovery systems. • Developed rigorous mathematical model for direct and hybrid heat recovery systems. • Investigated optimal performance of spray dryer. • Compared proposed energy recovery schemes to find best configuration. Abstract Thermal dewatering using spray dryers is an energy-intensive process, which recently, applied for removal of water from industrial effluents by evaporation. Reduction of energy consumption is vital to reduce operating cost in addition to sustainable development. In this paper, the modern integrated energy savings scheme is proposed in four parts. (i) An advanced energy saving configuration named as a hybrid heat recovery system for a spray dryer, (ii) Developed rigorous but simple mathematical model for direct and hybrid heat recovery system, (iii) A generalized performance indicator for investigation of environmental impact on energy recovery called as 'Sustainability Index' is proposed for thermal systems and demonstrated for spray dryer, and finally (iv) The proposed methods are explained with the help of an illustrative example taken from the literature. Up to 80% recirculation ratio, performance enhancement, and Sustainability Index are significantly higher for the hybrid heat recovery system than the direct heat recovery system, while for higher than 80% recirculation ratio, both are approaching towards nearly same value. Furthermore, with increasing recirculation ratio, moisture recirculation into the drying chamber also increases, which reduces the requirement of the mass flow rate of dry hot air due to the higher heat capacity of recirculated moisture. A reduction in hot air requirement reduces the high-grade blower power in addition to net heat supplied. Dryer efficiency and sustainability index, both show a strong dependency on the amount of heat recovery for spray dryer. [ABSTRACT FROM AUTHOR]