An economic analysis of biomass power generation was conducted. Two key technologies-direct combustion with a steam turbine and gasification with a syngas engine-were mainly examined. In view of the present domestic biomass infrastructure of Korea, a small and distributed power generation system ranging from 0.5 to 5 MW(e) was considered. It was found that gasification with a syngas engine becomes more economically feasible as the plant size decreases. Changes in the economic feasibilities with and without RPS or heat sales were also investigated. A sensitivity analysis of each system was conducted for representative parameters. Regarding the cost of electricity generation, electrical efficiency and fuel cost significantly affect both direct combustion and gasification systems. Regarding the internal rate of return (IRR), the heat sales price becomes important for obtaining a higher IRR, followed by power generation capacity and electrical efficiency. (C) 2011 Elsevier Ltd. All rights reserved.