The environmental and socio-economic impacts of biomass utilization by co-firing with brown coal in an existing thermoelectric unit in Greece or through its pure combustion in a new plant were studied and evaluated in this work. The 125 MW, lignite-fired power plant in Ptolemais Power Station (Western Macedonia) was used as reference system. The environmental benefits of the alternative biomass exploitation options were quantified based on the life cycle assessment methodology, as established by SETAC, while the BIOSEM technique was used to carry out socio-economic calculations. The obtained results showed clear environmental benefits of both biomass utilization alternatives in comparison with the reference system. In addition, co-firing biomass with lignite in an existing unit outperforms the combustion of biomass exclusively in a new plant, since it exhibits a better environmental performance and it is a low risk investment with immediate benefits. A biomass combustion unit requires a considerably higher capital investment and its benefits are more evident in the long run. Copyright (c) 2005 John Wiley & Sons, Ltd.