The treatment and disposal of sewage sludge is one of the most important and critical problems of wastewater treatment plants. 8.7 million tonnes of dry matter of sewage sludge were produced annually in the European Union in the year 2020. Due to the fact that sewage sludge contains a large number of substances that are not beneficial for human health, the conditions for sludge management will be significantly tightened in the EU countries. One option for sludge liquidation is the production of biofuel in a form of granules or pellets from sewage sludge enriched by waste celluloses. The achieved results show that the resulting quality of such alternative biofuel is fully comparable to conventional fossil fuels. The economic analysis is based on the simulation of cash flows associated with the implementation of the project over the lifetime and the calculation of levelised cost (LCOE). Results shows (under the current economic situation) that solar dryer technology ensures the lowest LCOE at the level of 26 EUR/GJ in fuel. If the LCOE of the alternative biofuel includes the price of the saved emission allowance and the future costs of sewage sludge disposal, the resulting price is directly competitive with lignite. The results thus clearly show that there is an ecological and economically competitive substitute for solid fossil fuels, which may be an important step for the future use of local combustion sources such as district heating plants.