Cogeneration proved itself as one of the promising energy efficient technique to produce electricity and useful thermal energy from a single fuel source. Detailed study of thermoeconomics parameter relevant for the feasibility study of employing biomass fuel for cogeneration is presented in this study. Three different plant configurations are presented and assessed to improve the energy efficiency of a paper mill. The mill employs biomass, namely rice husk as its energy source which not only enhances the scope and economic feasibility of cogeneration but also has particularly importance from sustainable energy balance and environmental point of view. The options studied are gas turbine, steam turbine and combined cycle and are evaluated on the basis of Simple payback period, Annulaised Life Cycle Cost (ALCC) and energy utilisation factor. The result shows that mill have a strong potential of cogeneration and the combined cycle based cogeneration is concluded as a best option as it have least payback period and the least ALCC. It is found that the proposed combined cycle cogeneration in existing set up in mill can provide huge financial savings with payback period of 2.6 yrs.