Processing (upgrading) to dry and uniform fuels (briquettes, pellets, and powder) extend the use of biomass wastes as an energy source. Upgrading decreases transportation costs, increases storage capacity, and improves combustion properties. The intention of the present work was to investigate the effect of chemical characteristics and physical characteristics on processing, handling characteristics, combustion, and ash melting, using upgraded biofuels. The raw materials used was spring-harvested reed canary-grass (RCG) and wood residues (stemwood without bark). RCG with different ash contents was upgraded to briquettes and combustion experiments were done in a 180 kW boiler. RCG was found to be a suitable raw material for briquetting and variation in ash content did not affect the briquette quality. Combustion experiments showed that RCG can be burned with good result and the variation in ash content did not effect flue gas emissions. The ash formed during combustion showed a tendency to melt. Estimation of melting behaviour was done by ASTM fusion test, a bench scale fluidised-bed combustion test (5 kW), and by extracting melting behaviours from the ternary diagram SiO2-CaO-K2O. For RCG with low ash content (3-4%), the tendency to melt was higher compared to RCG with high ash content (5-10%). Wood powder cut in various impact mills and knife mills was characterised using sieve analysis, laser diffraction, image analysis, and a funnel method for measuring the tendency to bridge. The wood powder fuels were then combusted in a 150 kW powder burner to study emissions as a function of particle properties. Sieving and image analysis showed that impact mills produced wood powder with more fine particles than wood powder produced by knife mills. Image analysis showed that particle shapes differed between the two types of mills. The bridging tendency was higher for powder produced by impact mills than by knife mills. Combustion experiments showed that particle characteristics affected fuel feeding, ignition, unburned pollutants, furnace temperature, and content of unburned matter in ash. An increased content of smaller particles had a negative effect on fuel feeding and NO emissions were slightly increased while it had a positive effect on ignition, unburned pollutants (decreased) and content unburned matter (decreased).