Utilisation of renewable energy is an important factor in search for effective way to reduce the emissions of greenhouse gases and to improve the security of energy supply. So far the decentralised power generation in Latvia has dominently been used on fossil fuel - natural gas, whereas wood fuel plays a minor role. The paper describes a method for evaluation of the competitivness of small-scale wood fuel combined heat and power plants (CHPs). For simulation, a model for cost estimation including economic and social criteria is applied. One more method is proposed for evaluation of the wood fuel marginal price. In the model, the feed-in tariff is considered as the instrument strongly affecting the competitivness of small scale CHPs. The result demonstrate that, despite the competitivness of the wood fuel price, the formula applied for factual feed-in tariff calculation does not give advantages in the case of utilising wood fuel for development of CHP technologies compared with natural gas.