Bagasse is selected as the biomass source that is studied because of its annual significant rate production in Iran and potential for energy generation. Bagasse has been as an energy source for the production of energy required to run the sugar factory. The energy needed by factories was supplied by burning bagasse directly inside furnaces, which had an exceptionally low output. To this end, today, a secondary use for this waste product is in combined heat and power plants where its use as a fuel source provides both heat and power. In addition, low efficiency of traditional methods was caused to increase the use of modern methods such as anaerobic digestion, gasification and pyrolysis for the production of bio-fuels. In this paper, the energy conversion technologies are compared and ranked for the first time in Iran. Therefore, the most fundamental innovation of this research is the choice of the best energy conversion technology for the fuel production with a higher efficiency. To assess the feasibility application and economic benefit of biogas CHP plant, a design for a typical biogas unit is programmed. The results show the acceptable payback period; therefore, economically and technically, biogas CHP plant appears to be an attractive proposition in Iran. Copyright (c) 2012 John Wiley & Sons, Ltd.