To investigate options for increasing the electrical efficiency of decentralized combined heat and power (CHP) plants fuelled with biomass compared to conventional technology, this research explored the performance of an alternative plant design based on thermal biomass gasification and solid oxide fuel cells (SOFC). Based on experimental data from a demonstrated 0.6 MWth two-stage gasifier, a model of the gasifier plant was developed and calibrated. Similarly, an SOFC model was developed using published experimental data. Simulation of a 3 MWth plant combining two-stage biomass gasification and SOFCs predicted a net electrical efficiency of 44.9% (LHV (lower heating value)) when 1.4 MWe power was produced. The work had significant focus on providing a highly accurate model of the complete plant. A sensitivity analysis revealed that the SOFC operating temperature, SOFC fuel utilization factor, carbon conversion factor in the gasifier and the efficiency of the DC/AC inverter were the most influential parameters in the model. Thus, a detailed study of the practical values of these parameters was conducted to determine the performance of the plant with the lowest possible uncertainty. The SOFC fuel utilization will in practice be based on a balance between efficiency and lifetime of the SOFC and is thus a decision of the plant design.