Currently, waste heat and waste energy power generation units typically adopt a direct-connected line connection to the busbar as small-scale units. However, the selection of their neutral grounding methods still follows the traditional patterns used in thermal power generation or power grid systems, without adequately considering the unique characteristics of waste heat and waste energy units. This article takes a waste heat and waste energy power generation unit from a steel plant as an example, the applicability and advantages/disadvantages of different grounding methods in practical applications are systematically analyzed. Based on the operational characteristics of the units, a targeted method for selecting grounding methods is proposed. This method comprehensively considers factors such as system characteristics, protective coordination, and operational reliability. The study demonstrates that the selection of neutral grounding methods for waste heat and waste energy power generation units should fully account for their direct-connected line characteristics and system features. The method proposed in this article provides a scientific basis and practical reference for the selection of grounding methods in similar units within related industries.