The objective of this paper is to perform the energy, exergy and exergoeconomic analysis for the Hamedan steam power plant. In the first part of the paper, the exergy destruction and exergy loss of each component of this power plant is estimated. Moreover, the effects of the load variations and ambient temperature are calculated in order to obtain a good insight into this analysis. The exergy efficiencies of the boiler, turbine, pump, heaters and the condenser are estimated at different ambient temperatures. The results show that energy losses have mainly occurred in the condenser where 306.9 MW is lost to the environment while only 67.63 MW has been lost from the boiler. Nevertheless, the irreversibility rate of the boiler is higher than the irreversibility rates of the other components. It is due to the fact that the combustion reaction and its high temperature are the most significant sources of exergy destruction in the boiler system, which can be reduced by preheating the combustion air and reducing the air-fuel ratio. When the ambient temperature is increased from 5 to 24 degrees C, the irreversibility rate of the boiler, turbine, feed water heaters, pumps and the total irreversibility rate of the plant are increased. In addition, as the load varies from 125 to 250 MW (i.e. full load) the exergy efficiency of the boiler and turbine, condenser and heaters are increased due to the fact that the power plant is designed for the full load. In the second part of the paper, the exergoeconomic analysis is done for each component of the power plant in order to calculate the cost of exergy destruction. The results show that the boiler has the highest cost of exergy destruction. In addition, an optimization procedure is developed for that power plant. The results show that by considering the decision variables, the cost of exergy destruction and purchase can be decreased by almost 17.11% Copyright (C) 2008 John Wiley & Sons, Ltd.