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Existing combined heat and power plants are seeking additional heat sinks to address challenges arising from the declining district heating demand and the increasing share of renewable energy in primary energy use in the coming decades. In the meantime, the world’s demand for sustainable fuel production keeps increasing due to the need to reduce carbon emissions and mitigate the effects of climate change. Fast pyrolysis, as a thermochemical conversion process based on widely available feedstocks such as lignocellulosic biomass, is promising to provide a long‐term supply of sustainable fuels, and could be integrated into existing combined heat and power plants due to the scalability and maturity of this method. This work focuses on techno‐economic analysis of integrating fast pyrolysis into existing combined heat and power plants for biofuel production. A process model of fast pyrolysis and bio‐oil upgrading is established in Aspen Plus to simulate the integration process. In this work, particular attention is given to the profitability analysis based on different final fuel products(crude pyrolysis oil and upgraded bio‐oil). Different hydrogen generation solutions (electrolysis, and gasification) for onsite bio‐oil upgrading are also examined. This study also performs an analysis of several economic indicators, such as payback period, net present value, and internal rate of return to provide insights for the future business model development for such systems. Sensitivity analysis is also carried out to further reveal the impacts of key variables in the economic evaluation process on the system’s profitability.