This paper presents a view on sustainable development of biomass CHP in Latvia. Sustainability is crucial for further development in the modern world. Energy demand is increasing every year and energy production systems fueled by non-renewable resources are not sustainable. An increasing amount of greenhouse gas emissions makes us to think about alternative resources, which are the most reasonable for a specific country. Biomass, including forestry residues, have significant potential in energy production in Latvia. This paper studies biomass usage in the energy production sector since 2001 and the development of a cogeneration plant which includes biomass CHP.