Electricity generated from biomass is more costly to produce than fossil fuel and hydroelectric power for two reasons. First, biomass fuels are expensive. The cost of producing biomass fuel is dependent on the type of biomass, the amount of processing necessary to convert it to an efficient fuel, distance to the energy conversion plant, and supply and demand for fuels in the market place. Biomass fuel is low-density and non-homogeneous and has a small unit size.

Consequently, biomass fuel is costly to collect, process, and transport to facilities.  Second, biomass-to-energy facilities are much smaller than conventional fossil fuel-based power plants and therefore cannot produce electricity as cost-effectively as the fossil fuel-based plants.

The biomass-to-energy facilities are smaller because of the limited amount of fuel that can be stored at a single facility. With higher fuel costs and lower economic efficiencies, solid-fuel energy is not economically competitive in a deregulated energy market that gives zero value or compensation for the non-electric benefits generated by the biomass-to-energy industry.

Biomass availability for fuel usage is estimated as the total amount of plant residue remaining after harvest, minus the amount of plant material that must be left on the field for maintaining sufficient levels of organic matter in the soil and for preventing soil erosion. While there are no generally agreed-upon standards for maximum removal rates, a portion of the biomass material may be removed without severely reducing soil productivity.

Technically, biomass removal rates of up to 60 to 70 percent are achievable, but in practice, current residue collection techniques generally result in relatively low recovery rates in developing countries. The low biomass recovery rate is the result of a combination of factors, including collection equipment limitations, economics, and conservation requirements. Modern agricultural machinery can allow for the joint collection of grain and residues, increased collection rates to up to 60 percent, and may help reduce concerns about soil compaction.

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