Process integration methods aim at identifying options for heat recovery and optimal energy conversion in industrial processes. This paper introduces a targeting method, which includes heat exchange restrictions between process sub-systems. The problem is formulated as a MILP (mixed integer linear programming) problem, which considers not only restricted matches but also the optimal integration of intermediate heat transfer units and the energy conversion system, like heat pumping and combined heat and power production. Moreover a new mathematical formulation is presented to chose optimal heat transfer technologies. For solutions avoiding the energy penalty, the composite curves of optimal heat transfer units have to be embedded between the new generated hot and cold envelope composite curves. The application of the method is illustrated through an industrial example from the pulp and paper industry. (C) 2011 Elsevier Ltd. All rights reserved.