Spray drying of milk powder is an energy intensive process and there remains a significant opportunity to reduce energy consumption by applying process integration principles. The ability to optimally integrate the drying process with the other processing steps has the potential to improve the overall efficiency of the entire process, especially when exhaust heat recovery is considered. However, achieving the minimum energy targets established using pinch analysis results in heat exchanger networks that, while theoretically feasible, are impracticable, unrealistic, contain large number of units, and ultimately uneconomic. Integration schemes that are acceptable from an operational point of view are examined in this paper. The use of evaporated water is an important factor to achieve both energy and water reductions. The economics of additional heat recovery seem favourable and exhaust heat recovery is economically justifiable on its own merits, although milk powder deposition should be minimised by selecting an appropriate target temperature for the exhaust air. This will restrict the amount of heat recovery but minimise operational risk from heat exchanger fouling. The thermodynamic constraints caused by the operating temperatures of the dryer and the poor economics exclude the use of heat pumps for exhaust heat recovery in the short to medium term.