The interest in compressed biofuels such as pellets and briquettes has increased in Sweden. In order to be compressed, the biomass must have a suitable moisture level, i.e. it has to be dried. In recent years, this has led to a considerable amount of research and development of different kinds of drying methods. Predominantly, such efforts have been made on a laboratory scale. However, when a drying method is developed on a laboratory scale, the up-scaling is problematic. This paper reports on the development and building of an pilot-scale test and demonstration plant. The requirements of the industrial partners in combination with a survey of available drying techniques led to the choice of a drying method that uses atmospheric condition superheated steam, a method in which the drying can take place either in a fluidized or in a fixed bed. Sawdust and willow wood chips were used as testing materials. A typical flow of steam in the experiments was 0.46 kg/s with an input of wet material in the range of 150-240 kg/h. When sawdust was dried in a fluidized bed and the temperature after the superheater was 201degreesC, the moisture content was reduced from 51.9% to 19.4%. The dry material flow was 115 kg/h, the energy efficiency 83.3% and the specific power consumption was 75 kJ/kg. When willow wood chips were dried in a fixed bed and the temperature after the superheater was 207degreesC, the moisture content was reduced from 58.3% to 17.1%. The dry material flow was 66 kg/h, the energy efficiency 76.4% and the specific power consumption was 208 kJ/kg.