In this paper, the configuration and performance of a polygeneration system are studied by modelling the integration of a lignocellulosic wood-to-ethanol process with an existing combined heat and power (CHP) plant. Data from actual plants are applied to validate the simulation models. The integrated polygeneration system reaches a total efficiency of 50%, meeting the heating load in the district heating system. Excess heat from the ethanol production plant supplies 7.9 MW to the district heating system, accounting for 17.5% of the heat supply at full heating load. The simulation results show that the production of ethanol from woody biomass is more efficient when integrated with a CHP plant compared to a stand-alone production plant. The total biomass consumption is reduced by 13.9% while producing the same amounts of heat, electricity and ethanol fuel as in the stand-alone configurations. The results showed that another feature of the integrated polygeneration system is the longer annual operating period compared to existing cogeneration. Thus, the renewable electricity production is increased by 2.7% per year.