This paper presents economic viability study of decentralized biomass power plant using agricultural residue by computing the cost associated with capital investment for biomass power plant, operating and maintenance cost of plant, processing cost of residue used as fuel, equivalent economic value of embodied nutrients (NPK) lost from the residue and comparing these costs with the income generated from the power generation. The objective is to determine cost effectiveness of adding chemical fertilizers for soil nutrient replenishment and utilizing agricultural residue for biomass energy (instead of soil incorporation). The discounted rate method is used to study the economic viability. Results show that cotton stalk and groundnut shell residue (with higher nitrogen content) are not cost effective for electricity production. Further, rice and wheat residue are observed to be cost effective for biomass power plant. (C) 2018 Elsevier Ltd. All rights reserved.