AbstractMany companies in the U.S. are entering the wood pellets market due to the increasing importance of woody biomass utilization for energy purposes. Despite a 200% increase in U.S. production, it is difficult to obtain reliable information from the research community relative to the production costs, requirements, and market trends for wood pellets. Based on comprehensive investigations, a techno-economical model for the determination of production costs for U.S. manufacturers (internal market, with sell strategy based on bagged product) was developed, considering the most important technical and financial factors that affect pellet production. Outcomes from a case-study show that pellet production is profitable for U.S. manufacturers and distributors/retailers, with more revenue margin for retailers. Sensitivity analyses were performed, showing that a pellet plant is especially sensitive to changes to the cost of biomass and labor. In addition, changes in energy and CAPEX also affect the NPV and IRR of the project, but not as significantly as biomass and labor costs. Additional findings indicate that increasing the plant size especially increases CAPEX, with labor being the least increased cost factor; in addition, production factors have to be closely monitored for small-scale producers, due to increases in operational costs.