•Sabatier-based CO2 methanation plant modelling and simulation.•Plant optimization through Pinch Analysis.•Sabatier conversion yield improvement.•Thermoeconomic analysis and identification of critical plant components.•Sensitivity analysis of electricity cost, CO2 emission trades and CO2 sequestration costs on methane cost. The present global energy scenario has to face the technical and economic challenges of the global CO2 emissions mitigation. The two main technological paths followed are on one hand the increase of renewable share and on the other the implementation of carbon capturing and storage solutions. While the main drawback of the first one is the need to include an energy storage to compensate for the fluctuations of the sources, the one of the latter is related to the high CO2 sequestration costs. Sabatier based power-to-gas systems are potential answers for both the above described issues. Object of this paper is the modelling, process design and simulation of a CO2 methanation plant based on the Sabatier reaction. Since the main issue of power-to-methane storage technology is its low overall conversion efficiency, the pinch analysis approach has been applied to enhance the energy recovery that represents a key factor in the increase of the plant global efficiency. An exergy and thermoeconomic analysis of the proposed plant was performed in order to evaluate the main sources of irreversibility and to calculate the CH4 production costs as a function of the main plant parameters. A Sabatier conversion yield of 93.48% has been obtained producing 0.42 kg of CH4 per each kg of captured CO2 with an improved cost of 53 €/MWh. The results of the study have shown the great potentials of this solution as an “energy storage” and CO2 capture facility.