The United States has become dependent on nonrenewable resources such as nuclear, coal, and crude oil as major sources of energy and fuel. Ethanol has been identified as a renewable fuel source that may help alleviate this dependence. Recent technological advances have developed a method to produce ethanol from lignocellulosic biomass. The purpose of this study is to determine production and transportation costs of switchgrass, eastern gammagrass, and giant miscanthus using Mississippi and Oklahoma data. This study also estimated the returns above the cost of feedstock for a biorefinery and the incentive package needed to pay for feedstock and construction cost. Results indicate cost difference across species, method of harvest, and location. The biorefinery returns and the incentive package explain the amount of capital needed for a biorefinery to compensate for the cost of feedstock and construction.