Brown coal is considered to be a competitive primary energy source for power generation in parts of Central and Eastern Europe due to the economically recoverable reserves of this fuel in these regions. On the other side, it is well known that brown coal contains significant amounts of moisture which decreases the overall plant thermal efficiency due to the increased flue gas thermal loses. In order to keep the competitive edge of brown coal, an improvement of the power plant efficiency is required. One way to achieve this target is to dry the moist brown coal before combustion. Conventionally, the necessary moisture extraction process is integrated into milling, where a recirculated flue gas stream is used as a drying agent. External brown coal drying offers the potential to increase the net thermal efficiency of the entire power generation process by up to 5% points. This paper presents a description of the technical fundamentals of drying techniques developed and successfully tested so far. Furthermore, it presents computer simulation studies for the integration of an external dryer into a steam cycle of a Greek brown coal-fired power plant as a typical test to demonstrate the potential of the drying technologies for power generation. The major objectives of these studies are to formulate basic drying schemes which might be integrated into a power production steam cycle. Three dryers using steam as a drying agent, e.g. the tubular dryer, the fluidised bed dryer and the mechanical thermal dewatering process are compared to the conventional flue gas drying technology using a computer simulation.