This paper proposes a thermo-economic assessment of small scale (100 kWe) combined heat and power (CHP) plants fired by natural gas and solid biomass. The focus is on dual fuel gas turbine cycle, where compressed air is heated in a high temperature heat exchanger (HTHE) using the hot gases produced in a biomass furnace, before entering the gas combustion chamber. The hot air expands in the turbine and then feeds the internal pre-heater recuperator, Various biomass/natural gas energy input ratios are modeled, ranging from 100% natural gas to 100% biomass. The research assesses the trade-offs between: (i) lower energy conversion efficiency and higher investment cost of high biomass input rate and (ii) higher primary energy savings and revenues from bio-electricity feed-in tariff in case of high biomass input rate. The influence of fuel mix and biomass furnace temperature on energy conversion efficiencies, primary energy savings and profitability of investments is assessed. The scenarios of industrial vs. tertiary heat demand and baseload vs. heat driven plant operation are also compared. On the basis of the incentives available in Italy for biomass electricity and for high efficiency cogeneration (HEC), the maximum investment profitability is achieved for 70% input biomass percentage. The main barriers of these embedded cogeneration systems in Italy are also discussed. (C) 2013 Elsevier Ltd. All rights reserved.