The moisture content of wood-based biofuels (bark, forest residues, and waste wood) used by the forest industry typically varies between 50 and 63 w-%. The high moisture content considerably decreases the power production of the power plant. The main target of this paper is to compare the drying costs of two alternative drying systems: multi-stage drying, and single-stage drying with multi-stage heating. Air is used as a drying gas in both systems and is heated in indirect heat exchangers. Secondary heat, back pressure steam, and extraction steam are available for heating the drying air. Both capital and running costs are included in the drying costs. The drying systems are compared in example cases where the availability of heat sources, amortisation time, and price of elecricity are different. According to results, single-stage drying is usually a more economic drying system when the amortisation time is short. However, the competitiveness of multi-stage drying improves as the amortisation time becomes longer. (C) 2003 Elsevier Ltd. All rights reserved.