Decarbonisation of the heating sector is a key challenge for the European Union to achieve its ambitious goal of becoming the first climate-neutral continent in 2050. Decarbonising the heating sector is about reducing fossil fuel consumption, finding new scenarios based on renewables and restructuring the operation of the district heating (DH) system. Recovering and integrating waste heat into the DH system has an enormous potential to meet the heating needs of buildings through non – combustion technologies while reducing carbon emissions. The waste heat from urban sources is advantageous because they are located near DH networks and areas with high heat demand. However, there is still no legal or regulatory framework for using of waste heat in the Baltic States. This paper has two main objectives: firstly, to consider a mathematical model for the pricing of waste heat. The waste heat integration strategies are tested in the Case study of a DH system in Salaspils, Latvia. A simplified model of a waste heat recovery system that recovers heat energy from a wastewater treatment plant through heat pump integration is developed. Secondly, to consider different pricing and cost determination scenarios when the waste heat is integrated into the district heating system. The heat tariff calculation model is based on the approved Latvian heat tariff calculation methodology.