This research models the techno-economic assessment of producing steam-processed lignocellulosic biomass pellets. An ASPEN PLUS model was developed to simulate the steam pretreatment and pelletization process. The model was validated against experimental data. Simulation results showed that steam pretreatment increases the calorific value and energy ratio of pellets compared to untreated pellets. However, the cost of steam-treated pellets is similar to untreated pellets when calculated per GJ of energy output due to the increased energy value, though initial capital and operating costs are higher for steam pretreatment equipment. The goal is to identify the optimal capacity level where steam-treated pellet production costs are lower