The integration of ethanol production with combined heat and power plants is considered in this paper. An energy balance process model has been used to generate data for the production of ethanol, electricity, heat and biogas. The geographical position of such plants becomes of importance when using local biomass and delivering transportation fuel and heat. An optimization model has thus been used to determine the optimal locations for such plants in Sweden. The entire energy supply and demand chain from biomass outtake to gas stations filling is included in the optimization. Input parameters have been studied for their influence on both the final ethanol cost and the optimal locations of the plants. The results show that the biomass cost, biomass availability and district heating price are crucial for the positioning of the plant and the ethanol to be competitive against imported ethanol. The optimal location to set up polygeneration plants is demonstrated to be in areas where the biomass cost is competitive and in the vicinity of small to medium size cities. Carbon tax does not influence the ethanol cost, but solicits the production of ethanol in Sweden, and changes thus the geography of the plant locations. (C) 2009 Elsevier Ltd. All rights reserved.