The objective of the present work was to develop a techno-economic system model to evaluate how logistics and production parameters affect the torrefaction supply chain costs under Swedish conditions. The model consists of four sub-models: (1) supply system, (2) a complete energy and mass balance of drying, torrefaction and densification, (3) investment and operating costs of a green field, stand-alone torrefaction pellet plant, and (4) distribution system to the gate of an end user. The results show that the torrefaction supply chain reaps significant economies of scale up to a plant size of about 150–200kiloton dry substance per year (kton DS /year), for which the total supply chain costs accounts to 31.8euro per megawatt hour based on lower heating value (€/MWh LHV ). Important parameters affecting total cost are amount of available biomass, biomass premium, logistics equipment, biomass moisture content, drying technology, torrefaction mass yield and torrefaction plant capital expenditures (CAPEX).