This paper investigates the possibility of establishing a win-win relationship between a wood pellets manufacturer and its customers when the manufacturer possesses a power plant fueled by biomass and buys wood material from forest companies. Two prerequisites must be fulfilled for this relationship. First, the price of wood pellets should be lower than the fuel currently used by potential wood pellets customers and, second, the price of wood material as a raw material for producing the wood pellets should not jeopardize the profitability of the operations of the wood pellets manufacturer, who also produces electricity from biomass and sells it to the state at the feed-in tariff price. A mathematical model has been developed for each prerequisite and applied to several examples. The results demonstrate that a win-win relation can be established in Croatia and most of the Member States of the EU. (C) 2010 Elsevier Ltd. All rights reserved.