In the examined heat engine, reverse electrodialysis (RED) is used to generate electricity from the salinity difference between two artificial solutions. The salinity gradient is restored through a multi-effect distillation system (MED) powered by low-temperature waste heat at 100 °C. The current work presents the first comprehensive economic and environmental analysis of this advanced concept, when varying the number of MED effects, the system sizing, the salt of the solutions, and other key parameters. The levelized cost of electricity (LCOE) has been calculated, showing that competitive solutions can be reached only when the system is at least medium to large scale. The lowest LCOE, at about 0.03 €/kWh, is achieved using potassium acetate salt and six MED effects while reheating the solutions. A similar analysis has been conducted when using the system in energy storage mode, where the two regenerated solutions are stored in reservoir tanks and the RED is operating for a few hours per day, supplying valuable peak power, resulting in a LCOE just below 0.10 €/kWh. A life-cycle assessment has been also carried out, showing that the case with the lowest environmental impact is the same as the one with the most attractive economic performance. Results indicate that the material manufacturing has the main impact; primarily the metallic parts of the MED. Overall, this study highlights the development efforts required in terms of both membrane performance and cost reduction, in order to make this technology cost effective in the future.